The economic challenges we face

How disruptive will the Trump presidency be?

At a recent Greater Concord Chamber of Commerce Economic Forecast luncheon, Jeffrey Fuhrer, executive vice president and senior policy adviser for the Boston Fed was the speaker. He freely admitted that Trump’s election surprised him as much as anyone. Although, in a small group conversation, he said that staff at other regional Feds saw Trump's popularity more clearly than those on the coasts, especially the Northeast.

The key message was that the Trump election is neither a disaster nor as “revolutionary” as Trump promises. While the Republicans have a majority in both the House and the Senate, these are mostly not Trump Republicans, so there is no Reagan mandate out there.

So what does that mean to us who live and work near Main Street?

Fuhrer says economic growth will continue to be tepid, maybe 1 percent to 1.5 percent; employment will be steady; and interest rates will rise. The fact that Germany has a negative interest rate means that the U.S. remains the safe harbor for global investors. But interest rates have been artificially suppressed for so long that once they pop the cork on the bottle, it will be very difficult to restrain the rise and hold it at 2 percent. If I understood him correctly, he thinks rates could float to 2.75 percent in a year or so.

Other positive news is that the financial markets are up. So what are the challenges?

Infrastructure spending is needed, but how to fund it is not clear (I favor an infrastructure bank selling 3 percent fixed long-term bonds, tax-exempt at the state and federal levels). The key is to make sure that these projects are real infrastructure investments, not just window-dressing such as “shovel-ready” top-paving that is really routine maintenance in disguise. There is much more to than just roads and bridges – water and sewer projects, airports, freight facilities, urban renewal/reclamation. Is the will and leadership there to really tackle this? Or will it be all talk and no action?

On immigration, there has been lots of talk, but what are we really going to do? Deport 13 to 15 million workers who are already here? Not likely. Fences and walls? With an aging and growing population, we need some immigration just to fill the jobs available today. We also need to recruit and secure intelligent tech workers. It is certainly an ideal time to tackle this issue head on, with the goal of establishing a national strategy for the next generation and beyond, not just political rhetoric and rolling back the welcome mat.

Trade is another bombastic topic. Trump has made all sorts of wild statements, but his most recent move seemed to be less dramatic. We need trade and exporting of high-tech is our future. We don't want to bring back low and menial jobs. This is an area where a rising tide truly does float all boats.

On health care, there is no turning back the Affordable Care Act. It might be tweaked, but the demand is there for expanded coverage and we need dramatic cost-containment. Frankly, what is promised is not sustainable. A key component is health/wellness, not just health care. We have to get the entire population healthier (physically and mentally) and keep them out of the health care arena.

As for tax cuts, with an anemic 1 percent to 2 percent GDP growth we do need stimulus, but entitlement programs need to be funded by those who can afford to pay. Why should millionaires collect Social Security? It is known as the “ability to pay pineapple.” Most folks would agree, even more so if they thought the funds would be spent wisely/efficiently Look at the Veterans Administration. Why would we let these folks have more dollars?

Lastly, the debt. While Fuhrer was mildly passive on this question, I think it is a killer for our kids (mine are 26 and 30) and our grandkids. Steve Forbes has some strong ideas about how to achieve accountability out of Congress. More on that in another column.

Final takeaway: All is not lost. The Trump presidency will not be any more disruptive then the Bush and Obama terms before him.

Bill Norton, president of Norton Asset Management and principal of Harrington & Reeves, is a Counselor of Real Estate (CRE) and a Facilities Management Administrator (FMA). He can be reached at

Categories: Real Estate