The political populism sweeping the U.S. and Europe is one of the wild cards in the forecast.
Economists don’t think President Trump’s plans to cut taxes and regulations and spend on infrastructure will drive U.S. GDP growth much above 2 percent. “I think the days of 3 percent U.S. growth are gone," McClean said. "Trump says we’ll get to 4 percent but the numbers don’t support that--we are looking at 2 percent.” McClean said.
He added, “These programs take a while to get money flowing and change happening. There’s a little upside this year for growth but no one thinks it shoots to 3-4 percent overnight."
However, Trump could put a fly in the ointment if he starts a trade war with China. “When you start slapping tariffs back and forth its not good for business,” he said.
The outlook in Europe is more generally grim with pending elections in the Netherlands, France, Germany and possibly Italy. Populism is on the rise under pressure from Syrian refugees and the Brexit.
“If Italy leaves the Euro zone, that’s a major break,” he said, noting Brexit will not actually take effect until 2019. “It affects the psyche more than anything and is expected to draw down growth,” he added.
Next page: China’s wild card discounted
Electronic systems sales are forecast to be up just 2% this year.