Tax cuts, deregulation and more federal spending advocated by the new Trump administration in the US are a classic remedy for economic stagnation and long unemployment lines. That medicine may be too strong for an economy that has grown for eight years, with wages now rising and the jobless rate near what many economists consider 'full' employment. A Reuters analysis of regional jobs data and historic trends suggests that stimulus could boost demand for workers in areas where labour is already tight. That, in turn, could stoke inflation, force the Federal Reserve to raise rates faster than expected, and make recession a greater threat. What the country needs now, labour economists and Fed officials say, is small-bore surgery – policies focused on depressed regions in its rural areas and industrial heartland, which fell out of sync with the global economy and emerged as Donald Trump's power base, helping him win the presidency. "When you think of what Trump is inheriting, it is an economy in which much of the recent crisis has been solved," said Jed Kolko, chief economist for the job site indeed.com. "The challenges that remain are the ones that are harder to fix," he said,...
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