The Dow Jones industrial average topped the 20,000 mark for the first time in history Wednesday.
Brian Westbury thinks it could approach 30,000 in the next two to three years.
Speaking at Home State Bank’s 55th annual economic forecast luncheon Wednesday at Boulder Ridge Country Club in Lake in the Hills, Westbury, a chief economist at First Trust Advisors LP, predicted that Donald Trump’s presidency will be good for the markets, job growth and the economy in general.
“We will see what we’ve called the plow-horse economy start to trot, and maybe run, even,” Westbury said.
Despite significant growth since the aftermath of the Great Recession, the stock market actually has been undervalued by more than 20 percent the past eight years, Westbury said.
Why is that? Because of high taxes, overregulation and increasing government spending.
In 1950, nondefense government spending was 6 percent of the gross domestic product. In 2015, it was 17.9 percent. That’s massive growth in taxpayer-subsidized spending.
During the presidencies of Ronald Reagan and Bill Clinton, Westbury said, nondefense government spending actually shrank as a percentage of the GDP. The U.S. also grew at a healthy 4 percent annually during those terms, he said.
The U.S. economy has been growing the past several years, but at a rate closer to 2 percent annually. Westbury predicts that will change for the better under Trump, who has promised to shrink the size of the federal government – he’s already put a hiring freeze in place – and reduce regulations on businesses.
“It’s going to be a pretty good environment to get your work done,” Westbury said.
Illinois, on the other hand, “is in a death spiral,” he said.
“When a company leaves Illinois today because they’re overtaxed, overregulated, over-sued, I cheer,” the longtime Illinois resident said, because it sends a message to the politicians in Springfield, and it’s also doing the right thing for the company and its employees.
As state lawmakers consider major tax hikes to try to balance its budget, Westbury said they should be cutting taxes.
“You can’t raise taxes enough to balance the budget,” he said. “You have to reduce expenses.”
Lawmakers, unfortunately, were in Springfield on Wednesday concocting new plans to raise our taxes, instead of being in Lake in the Hills listening to Westbury.