Economists say Wall Street's Trump rally overpriced

A survey also finds economists more optimistic about this year's prospects for job growth

WASHINGTON: Wall Street's historic rallies since Donald Trump's election overvalue the president's pledged pro-business tax and regulatory policies, according to a survey of economists released Monday.

But the survey by the National Association for Business Economics also found economists more optimistic about this year's prospects for job growth and fourth-quarter economic expansion than they had been in December.



"Panelists expect higher oil prices, rising long-term interest rates and further gains in compensation in 2017," NABE President Sean Mackintosh said in remarks accompanying the survey report.

Mackintosh said that on the whole the views of the panel, comprising about 50 forecasters from different organisations, were "largely unchanged" since a prior survey in December, holding that the economy should expand by 2.3% his year before rising to 2.5% in 2018.

All three major US stock indices have smashed records since Trump's election in November, with investors exuberant at the possibility of lower tax cuts, slashed regulation and a drive to revitalise American infrastructure.

The blue-chip Dow Jones Industrial Average and tech-rich Nasdaq have added nearly 13% since Election Day and the broader S&P 500 is up 10%. The markets' dizzy heights have prompted speculation that a correction could be in store.



According to the NABE survey released Monday, about 70% of forecasters surveyed said they believed markets were overpricing policy developments, while 26% did not.

A panel of roughly 50 forecasters also raised their expectations for GDP growth in the fourth quarter of this year by two-tenths to 2.4%.

Survey respondents also raised their expected average monthly job creation from 168,000 to 183,000, closer to the average monthly gain in 2016.

Nine out of 10 respondents also said the chances of a recession in 2017 were 25% or lower.