After hearing so much from mainstream media during the campaign about how Trump would ruin the economy, it’s time to take a look at the raw numbers. Before taking office, he has impacted the U.S. economy on several fronts, and the news is good. Here are the sectors that are booming.
Stocks
The stock markets have shown the most obvious and measurable impact of Trump’s election. Naysayers were very outspoken about how the markets would instantaneously crash if Clinton didn’t win. The truth has been the complete opposite. The Dow, NASDAQ and S&P 500 are all at record highs, and they are sustaining one of the best bull runs of the past decade.
The increases in investing are based on a few principles. First, Hillary’s tax plan is no longer a threat, so capital gains investments are surging. Second, investors believe that Trump will be able to push at least some of his tax cuts through, and they are putting their money behind that expectation. Third, all sectors seem convinced that infrastructure spending will happen, and the related industries are actually leading the stock boom.
Jobs
It’s been a rollercoaster year for jobs so far. The first half was underwhelming, capped by genuinely abysmal numbers in May. The summer saw a short-lived rebound, and the October numbers have been revised all the way down to 119,000 new jobs.
Then Trump was elected. The preliminary jobs report shows that November added 228,000 new jobs. Christmas season usually shows big hiring, but the remarkable thing to note is that retail was severely outpaced by other industries in job creation.
On top of that, November saw remarkable improvement in fulltime employment, as the U6 rate (measures part-time only workers) dropped to 9.3 percent from 9.5 percent.
It is all capped with the best wage growth seen since the recession started. The stark turnaround from October is largely linked to general expectations for the Trump presidency.
GDP
Fully refined GDP measures take longer than other metrics, so flat out proclaiming that the election fixed GDP growth would be reckless. What can be said is that the first nine months of 2016 saw abysmal growth, averaging under two percent. Fourth quarter projections currently hover around three percent, suggesting that the post-election economy is much stronger than the rest of Obama’s last year.
Factoring in the retail boost of Christmas season, this isn’t entirely uncommon, but these projections were made before Black Friday sales reports. When you consider that Black Friday 2016 did 15 percent better than 2015, the outlooks are pretty good. This Christmas season is off to a strong start, and the final quarter of the year just might outperform expectations.
Housing
Since 2008, housing has been a jumbled mess. Prices have soared in a handful of inflated markets, but most American’s have had to deal with simultaneously losing property value and being unable to afford a housing loan. It’s a near-paradoxical problem that has been slow to resolve.
Even before the election, housing markets had begun to normalize and experts were starting to regain confidence in real estate investing. Since Trump won, that trend surged.
The campaign was light on discussing housing regulation, but this is Trump’s wheelhouse. General expectations are that regulations will be eased, cutting associative costs for real estate development and property ownership. Already, housing is returning to the safe, reliable investment it once was, and the industry is expecting to finally, truly recover from the 2008 crises.
Why These Changes
We’ve discussed the direct measure of economic changes since the election finished, and we’ve lightly touched on how they tie to consumer and investor confidence. Going a little deeper, it all stems from uncertainty. A win by Hillary would have scared everyone from Wall Street to Main Street.
The major difference from a Trump victory relates to his stance on issues. He and the Republican Congress were elected on platforms of tax cuts, deregulation, infrastructure spending and trade renegotiations. For the people who have money to invest, hire or spend, all of those promises inspire confidence.
Even when you realistically account for compromise and logistics, the watered down versions of the campaign promises that will actually go into effect will still dump a lot of new money into the economy. Growth is inevitable, and early trends already show it.
Regards,
Ethan Warrick
Editor
Wealth Authority
