President Trump has eliminated or rolled back large chunks of regulation with businesses cheering the White House on, but it’s hard to find evidence it’s been a big help to the economy after one year.
So say the researchers at Goldman Sachs. Economists at the Wall Street powerhouse looked for proof of deregulatory benefits and said the evidence so far is thin.
“Deregulation has had a limited impact on the economy to date,” economists wrote in a report.
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Trump and Republicans have touted their success in cutting regulations and making it easier for companies to get permission for projects, saying it’s helping the economy to grow faster.
Congress, for example, used a little known law that had only been used once before to kill off a set of pending Obama-era rules. And the White House eased the regulatory crunch on the coal industry and approved the Keystone pipeline that had been blocked for years by President Obama.
Goldman examined three areas for signs of evidence to back up Republican claims: What the companies tell investors about regulatory costs; the effect of deregulation on stock prices; and the relationship between deregulation and hiring and investment.
Goldman said it couldn’t find tangible benefits in any of those three areas.
How come?
For one thing, the estimated cost of regulation on the economy “are not that high” relative to other business expenses, the firm said. Regulatory changes are also difficult to enact and slow to put into effect. And states and localities are arguably more heavy-handed with regulation than the federal government.
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It’s possible the upside for the economy will emerge over time, Goldman Sachs said, but it would be hard to tell since “the effects of deregulation on the economy are often vague and difficult to estimate.”
The most likely beneficiaries are financial firms — banks and brokerages — if Republicans follow through on plans to loosen restrictions imposed after the 2008 financial meltdown.
“Financial deregulation appears more likely to result in meaningful changes and is likely to be the most important items on the regulatory agenda for 2018 and beyond,” Goldman Sachs said.