The U.S. economy isn’t on course for a bump from President Trump’s policies over the next couple of years, a new economic analysis showed on Thursday.

Growth is expected to remain modest through 2019 even with stronger consumer and business sentiment, a roaring stock market and tax reform teed up by Republicans in Congress.

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"We don't see very much of a Trump effect for the U.S. economy over the next two years," said Gabriel Ehrlich, director of the Research Seminar in Quantitative Economics at the University of Michigan.

The report reflects expectations that Congress and the Trump administration will eventually pass a tax-reform package that includes corporate tax cuts.

“But we expect the effects of economic growth to be modest,” Ehrlich said.

The Michigan model used in the forecast assumes $150 billion in corporate and personal tax cuts annually, which will expand the deficit.

"The much-hyped tax reform being debated has the potential to reshape the nation's tax code in a substantial way for the first time since 1986," said Daniil Manaenkov, one of the report’s authors.

"We believe that federal deficits are going up, but by how much?" Manaenkov said.

The House passed its tax package on Thursday without any Democratic support. The Senate Finance Committee is aiming to vote on its version later in the day.

After the November election, consumer and business confidence rose, but the economy hasn’t gotten much of a boost in return.

“In theory, strong consumer and business sentiment should affect the economy but we haven’t really seen it so far in the hard numbers,” Ehrlich said.

The stock market has done well since the election and that is probably helping consumer spending, the report said.

The U.S. economy averaged 2.4 percent growth through the first two quarters of this year, still well short of the 4 percent pace of growth Trump promised during the campaign.

University of Michigan economists are projecting that overall economic growth will rise to an average of 2.2 percent this year from 1.5 percent last year. Growth will increase slightly to 2.5 percent in 2018 and slip to 2.1 percent in 2019.

"The Trump administration has yet to leave a lasting mark on the fiscal landscape," said Manaenkov, who was also joined by Michigan economist Owen Nie in authoring the report.

Other key economic aspects of the forecast include:

Jobs: The national economy will add 3.9 million jobs over the next two years — 2.1 million jobs in 2018 and 1.8 million in 2019.



Unemployment rate: The jobless rate will continue to fall to an average of 4.2 percent next year and 4.1 percent in 2019 from an average of 4.4 percent this year.



Inflation: Inflation is projected to reach 1.7 percent in 2018 and 2.1 percent in 2019.

Michigan economists expect the Federal Reserve to raise interest rates at the next meeting in December.



"The recent weakness in core inflation should worry the Federal Reserve," said Aditi Thapar, another author of the report.

"The Fed has openly admitted that it does not completely understand what is driving the weakness in inflation, but appears resolved to ignore it for now and maintain the pace of rate tightening,” Thapar said.



Housing market: Construction of new homes will rise to 1.2 million this year, driven primarily by single-family housing starts. Rebuilding after hurricanes Harvey and Irma should boost start next year followed by another slow year in 2019.



Sales of existing single-family homes are expected to rise by about 50,000 units to a total of 4.88 million in 2017. Sales growth stalls in 2018 as mortgage rates increase, but is expected to rise to 4.97 million units in 2019.



Disposable income: Income growth picks up the pace to 2.6 percent in 2018 and 3.2 percent in 2019, from 1.4 percent in 2017 as tax cuts are phased in and wage growth picks up. Consumption grows at a steady pace of 2.5-2.7 percent in 2018 and 2019.



Light vehicle sales: Sales of light vehicles will slow to 17.1 million units in 2017, down from 17.5 million sold last year, and remain virtually flat in 2018 and 2019.



Treasuries: By the end of 2018, the three-month Treasury bill rate will rise to 1.6 percent, the 10-year Treasury bond yield will reach 3 percent and the 30-year mortgage rate will reach 4.5 percent.