An outlook on the new year regarding financial markets, infrastructure, trade and healthcare - by Bill Norton

January 06, 2017 - Northern New England
Bill Norton, Harrington & Reeves Bill Norton, Harrington & Reeves

More than a month after the presidential election the world still has not come to an end! At a recent 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. 

If the newspaper accounts are accurate, Trump’s bombast and promises seem to be mellowing. Some of those who have interviewed with him have said he was mellow and rational. Alas, he seems to be loading up on retired generals!  So what does that mean to us who live and work near Main St.?

Fuhrer says economic growth will continue to be tepid, maybe 1% to 1½%; employment will be steady; interest rates will rise (eventually) ... The fact that Germany has a negative interest rate means that the U.S. remains the safe harbor for global investors. But as interest rates begin to rise here, they have been artificially suppressed for so long (2008) that once they pop the cork on the bottle, it will be very difficult to restrain the rise and hold it at 2%. If I understood him correctly, he thinks rates could float to 2¾% in a year or so. Other positive news is that the financial markets are up. What are the challenges?

Infrastructure spending is needed, but how to fund it is not clear (I favor an infrastructure bank selling 3% fixed long-term bonds, tax-exempt at the state and federal level). 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 this 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?

Immigration - Lots of talk, but what are we really going to do? Deport 13 - 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 (STEM & STEAM - Science, Technology, Engineering and Mathematics). 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 our 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.

Healthcare - There is no turning back the ACA. 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 healthcare arena. 

Tax Cuts - With an anemic 1% - 2% 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? 

Education – I agree with Tom Friedman in his newest book, Thank You For Being Late, that K-16 needs to shift from general and core curricula to teaching skills (including critical thinking).

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 take away. All is not lost. The Trump presidency will not be any more disruptive than the Bush and Obama terms before him.

Bill Norton, CRE, FMA, Hon. AIA NH, is a principal of Harrington & Reeves, Manchester, N.H.


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