It has grown increasingly clear that the United States’ economy experienced a slowdown in 2016. The industrial sector, especially capital investments, appears to already be in the midst of a recession. As well, other leading sectors of the American economy are exhibiting tangible signs of weakness and decline.
Retail sales trends for one are close to recession-level. This is particularly evident in transportation and restaurant-related businesses. These sectors are showing signs of a significant slowdown. In fact, the majority of the six commonly defined economic engines of growth are showing signs of stopping, and some have even reversed their course.
Although American exports constitute a ray of light, there are difficulties to overcome, such as global economic weakness, a strong U.S. dollar and the inevitable loss of the country’s competitiveness in international markets. Without question, this will hurt U.S. exports, generate an increase in imports and will create deflationary pressures on the U.S. economy.
What is the outlook for 2017? Growing budget deficits, rising interest rates, and a strong dollar will hit the U.S. economy – and financial markets – hard.
Trump’s policy changeovers in the first year of his new administration (2017) will cost the U.S. economy about one percentage point of GDP growth. Analysts believe that without these policy changes, America’s economy would have rebounded on its own in 2017. That said, this “Trump Slump” likely will not feel much different from the weak growth in 2016. In 2018 however, the positive impacts of Trump’s new policies are expected to take over, and increase the economy’s growth. Keep in mind that these forecasts do not account for a major trade war with countries around the world.
Under his new policies, Trump could make America great – for at least a few years, but the rest of the world will suffer because of it. As the global economy becomes more protectionist, the slowdown in trade will only be the beginning of a worldwide decline.
All things considered it is a challenging time to be an investor, both inside and outside the United States. Be that what it may, in times of volatility and uncertainty, investors generally look to the safety of hard assets to shield them from a sudden and unexpected drop in the markets. Given the obscure economic outlook for both the global and U.S. economies under a Trump Presidency, it might be wise to reassess the holdings in your investment portfolio and seek sanctuary in safer alternatives.