Calling for “cooperation, compromise and the common good,” President Trump used his much-anticipated 2019 State of the Union address to focus on issues intended to ease uncertainty for today’s businesses, most notably those related to trade, infrastructure and immigration.
Overall policy outlook
Mary Moore Hamrick
, national managing principal, Public Policy
President Trump pledged in his State of the Union address to keep the U.S. economy strong – vowing to reach pending international trade deals and a bipartisan infrastructure agreement that could help ease the uncertainty among business leaders.
The president’s promises to work with Congress to pass a long-overdue agreement on improving our roads, bridges and ports to keep the economy humming and to strike trade deals that would level the international playing field, if successful, would be welcome news to the business community.
State of the Union: Industry analysis
While infrastructure and international trade deals topped the President’s agenda to strengthen the economy, there are a number of implications for business leaders in key industries. Grant Thornton’s industry leaders weigh in with their analysis.
Consumer and industrial products
, national managing partner, Consumer and Industrial Products
“In his State of the Union address, the President highlighted some of the positive impacts current economic conditions are having on manufacturers. He highlighted that 600,000 new manufacturing jobs have been created. There is little doubt that some of the administration policies around regulatory reform and tax reform have contributed to this growth, but manufacturers are also concerned about the continuing impact of trade policy and specifically tariffs.
The President addressed this issue by exhibiting a positive belief that the U.S. and China can make a trade deal. However, he emphasized ‘It must be real structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.’ A worthy goal for sure, but the difficulty in this may not foretell a quick end to the current tariffs. Trump also emphasized for Congress the importance in pursuing the USMCA, which beginning this spring will be a measure of whether Republicans and Democrats can come together to authorize this agreement. This is a major priority for manufacturers, although a few adjustments might be warranted and will be lobbied hard.
The President still believes both parties should come together on an infrastructure bill. He stated ‘He was eager to work with Congress on legislation’. Manufacturers also believe this to be a critical issue to improve their supply chain efficiency and would like Congress and the President to find the funding for such a bill. That will be the main sticking point.
Clearly the President continues to pursue a strong pro-manufacturing agenda which speaks well to his base. Time will tell how much more he can get.”
Construction and real estate
, national managing partner, Construction, Real Estate, Hospitality and Restaurants
“During his 2019 State of the Union address, President Trump again highlighted the need to shore up the country’s infrastructure system. We welcome forward movement on this critical need, which will bring jobs and opportunities for construction companies and increased economic opportunities for many industries. America’s construction industry is well equipped and ready to begin work on roads, bridges, rail systems, and other projects that will nurture improved commerce and facilitate growth in the U.S.
Overall economic growth as well as the lowest unemployment in half a century are all positives for the real estate industry. Growth will spur increased demand for commercial and residential property as we move through 2019.”
, national managing director, Technology Industry Practice
“During his 2019 State of the Union address, President Trump described a foundation for American business that focuses on important building blocks for the technology industry including:
- Employment – The technology industry is an engine of job growth and of digital transformation affecting almost every other industry. To keep up with demand for new jobs skills, we must invest in STEM for our students, and reskilling of experienced workers disrupted by the 4th Industrial revolution.
- Fair trade – Technology is a global industry with customers, competitors, innovation and supply chains around the world. Free trade, open access to markets and protection of the intellectual capital of U.S. technology companies are essential to continued growth.
- Infrastructure – Technology underpins our business, social, educational and political lives. Ready access to technology and the internet is an essential component for individual and business growth. Unfortunately, today our infrastructure struggles to keep pace with demand and perpetuates a growing digital divide. Technology must be a central component of a revitalization of American infrastructure.
- Immigration – Innovation is the lifeblood of technology. More than half of the U.S. Tech Unicorns were founded by at least one immigrant. Competition for global talent is increasing. Unfortunately, today’s immigration system cannot meet the demand for this talent. We encourage a sustained effort to increase the number of high-skilled worker visas, and the structures that allow highly skilled workers to remain.
, national managing partner, Energy
“President Trump confirmed the importance of the energy industry to our economy. Our ability to increase oil and gas production through technological advances and position us as the global industry leader signals prosperity for U.S. energy companies in the near term.”
, national managing principal, Financial Services
“The President pledged to keep the U.S. economy strong during his State of the Union address. Yet, current economic and political factors are increasingly making a 2020 recession a likely possibility. As Diane Swonk
, Grant Thornton’s Chief Economist, recently noted in The New York Times
, ‘Government spending is playing out, the Fed has been sidelined and doesn’t have a lot of room to cut rates, global growth is slowing and political leaders at home and abroad are at one another’s throats. All that has raised the risk of a 2020 recession.’
As calls for an impending recession by 2020 get louder, more attention must be paid to drivers of economic uncertainty including political instability which impacts the ability to drive investments, a housing slowdown that is, in part, thanks to large student loan debt that Millennials continue to shoulder and an uncertain interest rate environment. As we move gradually to an anticipated downturn, these factors will take center stage. Only time will tell how severely the economy will be impacted in coming months and what the consequences will be for investment and business growth.”
While the president’s plan as articulated in his State of the Union address was short on specifics, the proof of success will be when bipartisan legislation is passed and signed into law.
The president’s calls for unity and bipartisanship were made in the shadow of the longest U.S. government shutdown in history and just days ahead of another potential shutdown — unless of course he, House Speaker Nancy Pelosi and Congress compromise on funding the government and settle their differences on border security and immigration. Business would like to see a solution that brings more skilled workers legally into this country — a win-win situation for everybody.
“The job of elected officials — first and foremost — is to fund the government,” noted Grant Thornton’s Mary Moore Hamrick, national managing principal, Public Policy. “And right now, they have yet to meet that primary responsibility. President Trump and Speaker Pelosi have the opportunity to show leadership and find common ground on any number of issues — including lowering the cost of healthcare and prescription drugs, passing the USMCA deal and continuing to foster an environment for job creation.”
Hamrick added, "Given the partisan start to the 116th Congress, it is too soon to tell whether our leaders will govern as one nation. Let’s start with a handshake agreement — hopefully not an eleventh-hour one — that avoids another shutdown on February 15 and leads to the type of bipartisan deals that make government more efficient and business more competitive."
Mary Moore Hamrick
National Managing Principal, Public Policy
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