The Comfort of Opinion
John F. Kennedy once said, “Too often we enjoy the comfort of opinion without the discomfort of thought.” This quote rings true when you look at all the opinions circulating on the internet about a Trump Administration. Opinions range from euphoric to apocalyptic depending on whose political views you like to read. This article will not change your opinion one way or the other about Donald Trump. It’s not meant to. This article discusses the impact a Trump Administration will have on commercial real estate. Before I take a stab at that topic, let’s look at Trump’s economic thinking.
A Shift in Economic Thinking
Assuming Donald Trump governs like he campaigned, his economic ideology will be a major sea change in thinking for the Republican Party. It will no longer be the party of Ronald Reagan. Instead it will be characterized by:
- Decreasing globalization and free trade. NAFTA (the North American Free Trade Agreement) will be renegotiated. Participation in the TPP (the Trans-Pacific Partnership) will be withdrawn.
- Fiscal policies that have the potential to greatly stimulate the economy but also have the potential for huge budget deficits.
- The promotion of policies stimulating traditional domestic manufacturing above other sectors of the economy.
For the first time in our nation’s history we will have a real estate developer as president. It stands to reason that his proposed policies should be very good for commercial real estate.
Trump Team Needs Capable Negotiators
As of this writing, President-Elect Trump has yet to name his economic team. No one knows how much of his economic agenda he’ll be able to enact. Because of Senate rules, Democrats still have considerable influence. Consequently, how much legislation gets passed will require cooperating with the Democrats. He’s president, not king. So he cannot just decree that his policies be put into law. To succeed Trump will need to have people on his economic team that are capable legislators. They need to know how to negotiate well with the other side. If not, very little will get through the Senate. Let’s assume he is successful in getting his policies enacted. Shown below are three likely outcomes that will affect commercial real estate: (more…)