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PKF Australia

Accountants and Business Advisers

Trump Triumphs in US Presidential Election

Trump Triumphs in US Presidential Election

Posted 10 Nov 16

After eleven months of campaigning, the US has now voted and elected its 45th President, Donald Trump.

The election of Donald Trump to the presidency creates a great deal of uncertainty over both the economic and policy outlook for the US.

In the short term, the key point to consider is how this uncertainty will impact confidence amongst households and businesses.

For the household sector, strong job gains and an emerging uptrend in wage inflation has sustained robust growth in consumption, often in excess of income growth. Uncertainty over what a Trump presidency will mean for main street America is likely to see a more subdued growth pulse for this sector, particularly for purchases which depend on credit such as vehicles. Having seen a moderation of late (in activity more so than prices), housing is also at risk of dampening GDP growth on a six to eighteen month basis, as conditions are re-assessed by both households and construction firms.

For corporates, uncertainty over Trump’s agenda is yet another reason to hold off on further investment. As we have continued to emphasise, equipment investment in the US has been persistently weak over the past two years, having suffered a cumulative decline of 2.6%. There is no reason to expect a return to growth materially above zero anytime soon. Likewise, partly the result of weak energy prices, structures investment has fallen 7% over that period and should also be expected to remain weak.

Given that it looks as though the Republicans will control Congress, Trump may be able to pass his intended policies. However, there is always the risk that some Republicans oppose the president-elect, resulting in delays and/or alterations to planned policies. That being said, looking a year or two out, assuming they are enacted, Trump’s policies on taxation could be supportive of growth.

In this environment it is important to stay close to our customers. For advisers, it is therefore important you are well versed on key messages to alleviate concerns over the current market fluctuations. In times of uncertainty, it is most important that customers remain focused on their long-term financial strategy. 

For more information and detail around the ‘Implications for the US Economy’, click here for a report from BT Group.


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