The Trump Economy: The Economic Impact of POTUS

The Economic Impact of POTUS

 

We have just completed the most contentious presidential election in contemporary history. Thank goodness it’s over (I know you agree)!  Whether you were pleased with the outcome, devastated or somewhere in between, we have begun a new era with Mr. Trump at the helm.  Yet to be determined are the actual policies this new administration will have success pushing through Congress, and the subsequent impact of those policies in shaping our nation, state and community.

 

As Financial Advisors, our task is to help guide clients through various financial and investment decisions. For that reason, policies with economic impact are of greatest concern.  The question to ask is whether the president of the United States has all that much impact on the economy.  In reality, the influence of presidential action and policy is often delayed and difficult to define.

 

There are certainly examples of presidents taking economic action with immediate impact. A recent and real example of these types of actions was experienced during the extreme economic downturn of 2007-2009. Sweeping financial and industry bail-outs during those years, along with a highly accommodative interest rate policy, laid a foundation which provided economic stability when it was needed most. To a lesser extent, presidential action facilitated an economic lift after the “Dot Com” bubble burst in the early 2000’s and again after 9/11.  Nearly three-quarters of a century earlier, Presidents Hoover and Roosevelt supported massive legislation in an effort to pull us out of the Great-Depression. These are, however, all unique and isolated events.

 

Through a broader lens we see that most economic actions taken by a president have much less immediate impact. An excellent example of this would be the substantial economic growth experienced during the Clinton administration. While President Clinton, as any other president would have done, took credit for robust U.S. growth, most economists point to policy that was put in place by President Reagan and continued by President H. W. Bush. It also works in reverse. President George W. Bush oversaw the housing market implosion, but the seeds of that storm were partially laid by his predecessor.

 

So, in a handful of weeks President Elect Trump will be sworn into office. That’s when the real work begins. It would be prudent for all of us, and in particular those that have been Mr. Trump’s greatest advocates, to remain sober minded and realistic. History proves that after the bluster and exuberance of the election ends, the reality of governing this great nation, including passing legislation, begins literally overnight.

 

We certainly love the idea of repatriation of corporate dollars back into the U.S. banking system. We also like an intelligently designed infrastructure bill which would put many people back to work.  Consumer spending is the largest portion of our economy, and people need jobs.  These big idea programs will take time to implement.  So in the immediate future, our suggestion is that we remain focused on our financial goals, invest appropriately, avoid speculation and adopt a “wait-and-see” approach. Maintaining discipline in your financial plan may allow you to experience economic growth, whether that growth is now, sometime in the future, based on presidential policy or just good old fashion capitalism.

 

Ian Maddox is the managing member of Hitchcock Maddox Financial Partners, a comprehensive wealth-management firm founded in 1999. For more information please visit www.retirementcenter.us or call (205) 201-1401.

No strategy, including asset allocation, ensures success or protects against loss. The opinions voiced in this material are for general information only and are not intended to provide specific investment advice or recommendations. All performance referenced is historical and is no guarantee of future results.

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