Economists Fear Tax Cut Benefits Will Be Undercut By NAFTA Rewrite

(CN) — The tax overhaul that cleared an important hurdle on early Saturday will provide a modest boost to the economy, but that growth could be dramatically undercut by the pending rewrite of the North American Free Trade Agreement, a survey of economists found on Monday.

The National Association of Business Economics said the 51 economists who participated in its latest survey believe the tax law changes working their way through Congress with boost growth by about 0.2 percent.

That is slightly less than they said they were expecting when last surveyed in September.

But 46 percent of the economists surveyed between Nov. 6 and 15, said they also believe the renegotiation of NAFTA will do at least some harm to the economy. That is up from 27 percent who held such a negative view in September.

points of growth to the U.S. economy, down slightly from what they expected in the previous NABE survey in September. The survey was taken Nov. 6-15, before the Senate passed a major tax overhaul early Saturday.

NAFTA has expanded trade between the United States, Mexico and Canada, but President Donald Trump has dismissed the agreement as a “disaster” and has vowed to negotiate a better deal for the United States.

Talks between the trade partners began in August, but they have stalled over Trump’s insistence that the nation’s trade deficit with Mexico and Canada be significantly reduced.

The association’s members believe that the United States economy has grown by 2.2 percent this year, and that it will expand by 2.5 percent in 2018. They also expect the year-end unemployment rate to come in at 4.1 percent and that the rate will remain unchanged in early 2018.

After that, they expect the unemployment rate to actually drop to 4 percent and stay there for the balance of 2018.

The economists also said they expect the nation’s inflation rate to remain below the Federal Reserve’s 2 percent target next year, but said despite this, they anticipate the Fed approving as many as three interest rate hikes in the year.

The central bank has already raised interest rates twice this year, and is expected to nudge the rates up again later this month.

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