Thoughts on the State and Future of the U.S. Economy with A Protectionist President
NOTE: The following was originally written in early 2017. Since, low unemployment and a strong US markets have continued despite low political optimism. Recent tax reform will likely continue the trend, but many feel that it was ill-timed and mainly benefitted the wealthy.
I’ve recently been hearing a lot about bearish sentiments on future of the US economy, both short and long term. I’ve had personal convictions on the topic, and after hearing many of them reaffirmed on Goldman Sach’s “Exchanges” podcast interview with their chief investment officer of private wealth management Sharmin Rahmani I felt more compelled to briefly share my thoughts. (link to podcast: https://itunes.apple.com/us/podcast/exchanges-at-goldman-sachs/id948913991?mt=2&i=1000380089845).
US equities (in particular stocks) are subject to the ephemeral public outlooks on the general health of the economy. While we are currently experiencing the “Trump Bump” due to signs of financial deregulation and 3 conservative branches of government, it is likely (in my opinion) that as more of his protectionist policies and outbursts occur there will be corollary periods of panic (a la tariffs and potential trade wars). However, there should be no fear. Not even four years of the staunchest of anti-trade stances can undo the decades of financial power that the US has held in the world economy.
There is a perennial prediction of the decline of the “American Empire”. Yet, the US still climbs to higher and higher standards of living. It would be ignorant and irresponsible to think that we could not lose this or that we are the greatest country in the world, but the warning signs for such decline in would be much more empirically evident than what we see today.
The US has the highest innovation (patents) per capita, the highest GDP per capita, and dominates the list of best universities in the world. The bottom line is that the smartest and highest achieving people in the world want to disproportionately be in America.