Political upheavals control and affect the economic scenario and business investments in every country. The US is no exception. When Donald Trump came into power, and even when the current president of the USA was fighting to win the elections, the stock market had hit the highest. The Dow Jones had peaked at that time, and consecutively closed high on a series of days. It was then that the value of dollar reached a height, and some of the stocks reached their highest price.
This shows how much the presidential elections and the change of power can affect the country’s economy and business fixed investments. While it’s clear what may happen with the stock market, it’s unclear what the fate of the business fixed investments would be.
Non-residential fixed investments and their effect
The private nonresidential fixed investment is a metric which is being gauged and kept record of by the Bureau of Economic Analysis. This metric measures the fixed assets or investments of the companies on the various items like technology, equipment’s and tools so that the productivity of workers can be increased. When productivity peaks, and employees need not work more hours for that, the profits also increases. Naturally, the worker wages are also triggered high by that. And high wages mean that the spending of consumers on the products also rises. However, the component of worker productivity is totally dependent on the investment of the business in its manpower.
The worst can be a low productivity growth graph where economy is at an expansion. This can be bad for a business. But that is the harsh reality which the US has been facing for the last one year and more. Every quarter has seen a slow growth of productivity, and thus business investments in terms of productivity growth are not getting justified.
Effect of populist movements
In the US, something which affected business investments more is the populist movement. Not even they could help to simulate the business investments better. Recently a survey was conducted by the Hitachi Capital, and it was found that more than $81 billion was abandoned by British companies on investments that were planned just because the country decided to leave the European Union.
It was just because of the decline in the British pounds strength that most of the business executives, who were British, eliminated their plans of business investment. Contrary to that, the US dollar which seldom loses its strength also could not guarantee a high amount of business investments on fixed assets. That’s because of the unhealthy and insecure future of the UK’s domestic economy.
Similarities between the Trump presidency and Brexit
There appears to be a lot of similarities between the trump presidency and the Brexit. There was a collapse in the stock market in the early Brexit days, and this was not repeated on the victory of Trump. Yet similarities are there.
It was the generation of populism and isolationism in businesses which made the mass anxious and uncertain, and that was reflected in comments of pollsters and analysts. Mexico and China being considered the biggest rivals of USA in trading, the announcement of Trump for the increment of tariffs on items brought from these nations has become a big cause for uncertainty on trading and industrial grounds.
The effect of protective stance of Trump on national economics
Economists in the nations are predicting that the high level protectionist agenda or stance of Trump may bring on losses and troubles for the fiscal year, as economic activities would be reduced thus affecting corporate margins.
Yet there are people in the industry who are inclined towards the Trump presidency and decisions being taken from the start of the regime, and are favoring the Congress controlled by the Republicans. It is being anticipated that in the coming year more focus would be on federal deregulation and corporate tax reform. And for the private sector, this is good news as investments and trade can be encouraged even in between the uncertainty of growth.
In a comment made recently, the Associated Builder and Contractors Trade Association stated how they expect working with this government to be interesting in crafting policies which can spice up the competition, which may result in business investment and construction jobs more than ever.
In a comment made by the celebrity columnist James Stewart, the view that Trump’s ways would be favoring small businesses and investors comes forth. However, he always stated that it may take some time for the initiatives taken by trump to show true colors. Already Trump is tackling with the weak business investment issue. Trump again has been criticized by the tax reform advocacy group on the grounds that businesses would have a hard time expensing fixed investments for non inclusion of tax provisions.
How can business investments still be managed?
In the current scenario, many businesses may not get enough investors, and that can be a big challenge for those who planned to fund their small businesses with the vision of getting good investors, who would believe in their business plans. Many business founders can take the path of funding their business with loans and business credit card loans. This can always be a quick solution to manage immediate funding, and sometimes get out of a crunch situation.
However, business loan at high interest rates cannot be managed too long as all the revenue drawn from the new business gets drained down the loan payment pipeline. To make it easy, you as the business owner may consider consolidating your debts. It’s one of the finest financial solutions to debt management when you are in a messy situation with lots of debts from various sources, with varying uncomfortable interest rates and terms. You can also consider hiring a proven business debt settlement company that can bail you out.
Hence, whether you get an immediate investor, or take loans, or later procure all loans into one consolidated comfortable loan, your small business will thrive in the US in the regime of Trump and you will see good days soon.
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