President-elect Trump will inherit unquestionably the strongest economy for an incoming administration since the George W. Bush administration. That strong economic performance heading up to the 2001 transition, moreover, was largely buoyed by an overvalued stock market that was about to deflate and cause a recession. There are no such obvious macroeconomic imbalances that look set to drag on growth in 2025 or beyond.
While the labor market has slightly softened in recent months, job growth in December was extremely rapid and accompanied by wage growth that remained above inflation yet fully compatible with a return to 2% inflation—the Federal Reserve’s preferred target. In short, the labor market remains extremely strong yet in no need of policy measures to rein it in. All in all, it is hard to imagine an incoming administration wanting a stronger economic situation to…