With every presidential and political change business around the country is bound to change; some times for the better, some times for the worse.
Well, it’s safe to say that the country was shaken up a bit after our most recent election, and change is bound to ensue. Trump supporters, and non-supporters alike, can agree though, that a Trump presidency can be good for business in the U.S.
All of this comes speculatively, however, as nobody is quite sure what will happen exactly, as well as being unsure of which sectors business will begin to rise and fall in. We, at Consider The Consumer,however, seem to think the country will begin to see a spike in the following sectors.
Retail & Consumer Goods
Throughout his campaign, Trump vowed to give America their largest tax cut since the Reagan administration.
With this being said, and depending on how certain ambiguities in the plan are worked out, the Trump administration’s tax proposal has the potential to boost American taxpayers’ overall after-tax income by nearly 20%. Meaning that people in the top 0.01%, with annual incomes upwards of $3.7 million, could save up to $1 million in taxes every year. (These numbers are for reference purposes only, we’re sure nobody wants to here about the .01% anymore.)
Relatively extreme corporate tax cuts appear to be on the horizon as well, having the ability to reverse tax inversions, creating more high-paying jobs in the country. Aranca reports that it is also likely that ordinary income tax rates will apply to income from carried interest, a boon to hedge fund managers as well as individuals banking on investment income.
Although the nation’s fiscal deficit could rise substantially — there’s no mention of spending reductions to offset the tax plan’s $7 trillion increase in debt — bigger tax cuts and the subsequent increase in individual income could cause an uptick in consumer demand.
With this being said, past statistical data shows Americans don’t save very much, like, ever, and there’s a good chance that we will all spend our bigger after-tax paycheck on consumer goods and creature comforts. So, let the spending begin!
Healthcare & Pharma
Additionally, The Affordable Care Act (Obama Care) will also come into play here. Trump promised to undo what President Obama had started, which, side stepping all political and moral issues, began to squeeze the margins of private insurers; and they didn’t like that all too much.
Healthcare and pharma companies could have a ton to gain during the next 4 years, more than likely outperforming the rest of the stock market.
President Elect Trump also promised the people better security, particularly against terrorism.
During his campaign, Trump demanded 90,000 more soldiers, a 350-ship navy (just ask Yahoo Finance), and 100 more fighter aircrafts. The businessman also pledged to strengthen American nuclear and missile defenses.
Republicans and quite a few bi-partisan policymakers believe that defense spending is among the best stimuli for the American economy, as our country’s history proves this as (somewhat of a) fact.
On Wall Street, U.S. defense stocks have spiked after Donald Trump’s unexpected victory; this comes with the expectation of the incoming administration to make good on their campaign promises to boost defense spending.
Banking & Finance
Aranca also reports that Trump is unlikely to saddle banks with more regulation.
In the short-term, however, sell-off in global markets is expected.
The Trump administration is also likely to deter a Fed rate hike in December amid fears it would further roil the already nervous markets. This could be bad news for banks as it would affect long-term borrowing costs and profitability. The Finance sector is expecting turbulent times during Trump’s term as well, dreading an expected market sell-off and delay in the Fed rate hikes that will impact banking.
A lack of further regulations however, could have positive impact on sentiments, and a deregulated environment could be a shot in the arm for large banks.
After his victory on election night, Trump preached to his supporters that he will “rebuild our infrastructure, which will become, by the way, second to none.” Tremendous infrastructure. Tremendous.
Lastly, fossil-fuel companies learned to step softly around the Obama administration, but will likely be able to enjoy much more freedom under a Republican government.
Trump has made country-wide promises to try and make America energy independent, reviving domestic oil, shale, and clean coal production, pushing toward that goal.
Not all energy companies are looking forward to Trump’s reign, however, as the renewable energy sphere could see its fortunes reversed as the country would move away from the clean and green rhetoric.
As of now, the country is the world’s largest greenhouse gas emitter and it looks as if we’re going to check the climate treaty obligations past lawmakers have gotten us into. This reduction of support for clean energy can really reduce the momentum the renewable energy sector was seeing in the recent past.