What ‘Trumponomics’ could mean for local businesses in 2017

The good, the bad — and the ugly.

This is how economist Joseph Quinlan divides “Trumponomics” as he described how some of the president-elect’s fiscal policies could either hurt or help local businesses and the U.S. economy at large in 2017.

“Overall, it’s a very constructive backdrop for the U.S. economy and for companies in the Bellevue area for 2017,” Quinlan told the Reporter after his recent visit to Bellevue, where he spoke at the Bellevue Chamber’s Eastside economic forecast breakfast.

Quinlan, the managing director and chief market strategist at U.S. Trust, Bank of America Private Wealth Management, forecast there are several “good” aspects of Donald Trump’s presidency.

While the U.S. economy has been expanding at a pace of about 2 percent a year and Trump vows to get the country to 4 percent, according to CNN Money, Quinlan forecast that Trump’s policies could spur the U.S. economy to break above a growth rate of 3 percent.

“Growth is accelerating around the world,” he said. “It’s picking up in Europe, it’s stabilizing in China, Southeast Asia, so to me it’s a good story.”

Quinlan said there will be a “firm demand” for a lot of goods and services that come out of the Bellevue area.

“Technology I’m very bullish on globally because four billion people have never logged on to the internet, so that’s a huge digital economy growth path in front of us and I think it’s very beneficial for Bellevue companies,” he added.

Quinlan also believes that Washington gridlock is now a thing of the past, given the Republican-controlled White House, Senate and House of Representatives. This means government officials are “showing up and they will do things,” said Quinlan, who regularly debriefs policy makers and legislators on Capitol Hill on global trade and economic issues.

This legislative action includes new government spending on upgrades to the nation’s roads, bridges tunnels and other infrastructure, which Trump has promised to spend up to $1 trillion on.

With the legislative gridlock behind the country, Quinlan also believes that could result in corporate tax reform. Fortune 500 companies are currently avoiding nearly $700 billion in U.S. federal income taxes on $2.4 trillion in offshore holdings, according to the Citizens for Tax Justice’s March 3 report.

But Trump seeks to end corporation’s use of offshore tax havens, which Quinlan predicted will bring trillions of dollars back into the U.S.

“We’ve got too much [corporate] cash sitting offshore not being put to work. And when you lower corporate taxes in the United States … you’re going to see a lot of money come in to the United States,” Quinlan said, noting that the U.S. has one of the highest corporate tax in the world. He added, “We’re going to be a manufacturing powerhouse that is going to be help driven in part by this foreign capital, foreign companies wanting to come to the Pacific Northwest, or Mississippi or you name it, so that’s going to be a key component. Capital goes where it’s treated well and if we treat it better, it’s going to come here.”

As for “the bad” aspects of Trump’s fiscal policies, Quinlan said the country is likely to see the U.S. federal deficit grow.

“The down side perhaps could be higher deficits and debt levels later on, but that’s nothing the market’s going to have to wrestle with [now],” Quinlan said. “I think that’s a story for 2018 and 2019. Then we’ve got to keep a close eye on our trading partners and capital flows to strengthen the dollar.”

He said interest rates will move up, but many other countries will not raise rates. In addition, the U.S. dollar will be stronger, which creates problems for U.S. companies’ exports.

Quinlan also highlighted “the ugly” aspects of Trumponomics.

In favor of pro-trade, Quinlan said he is concerned about Trump’s anti-trade policies. During his campaign, Trump accused China of devaluing its currency and vowed he would impose a 45 percent tariff on Chinese imports. Trump also proposed to tax imports from Mexico, and called the Trans-Pacific Partnership (TPP) “a rape of our country.”

Quinlan is worried that Trump’s policies could trigger a global trade war. He said he is concerned about the U.S. trade stance: “Politicians often don’t have a good understanding of how global supply chains work. These supply chains are largely invisible to politicians and tariffs on materials could really cause supply chains to suffer and our production to stagnate. Global supply chains are in the crosshairs of Washington politicians.”

Quinlan also noted that the TPP, which “is dead on the vine” was a “huge missed opportunity” for the U.S.

Another “ugly” aspect of Trumponomics is Trump’s push to close borders, which could hurt cities like Bellevue that depend on immigrants to spur growth.

“It makes no sense to send home smart foreigners,” Quinlan said. “Immigrants make our country stronger.”

He noted the U.S. is a young country that needs people to “pick apples” and to work at “Apple.”

“We need to pull in non-U.S. citizens.”

Other “ugly” aspects of Trump’s economic policies that Quinlan highlighted include populism, which he said is growing in popularity. He is concerned about Europe, noting that “Brexit is not going to be a fun divorce.”

Quinlan also said that Trump’s vow to dismantle globalization is a “big problem.” The U.S. has created prosperity through globalization, and the country’s $18 trillion economy is dependent on economic trade and cooperation, he said.

“China is going to laugh its way to the bank if we walk away from trade agreements,” he added.

Longer term, Quinlan is bullish about emerging markets and consumer spending in emerging countries. For example, he said smog in India presents an opportunity for GE to sell technology to reduce it. In addition, there are also growing healthcare needs in China. They have 20 million people suffering from dementia and 100 million people with diabetes. Addressing their needs presents an opportunity, Quinlan noted.

To capitalize on all the opportunities that Trumponomics may present in the next 12 months, Quinlan said Bellevue businesses and others around the U.S. “should put the petal to the metal.”

“If you need capital — get it now,” Quinlan stressed. “Expect spending on infrastructure. Expect corporate tax reform. This will be good for near-term growth, but it is unclear how durable our economy will be over a longer period.”

He added that one of the issues that comes up in the Bellevue economic survey every year are companies’ needs for more efficient infrastructure and the continuous need for human capital.

“So I think the private-public sector has to work more closely together to figure out infrastructure priorities and also help train/re-train, educate workers so they have the skill sets required of companies in this day and age,” he said.

More in Business

The new Bothell Friday Market will run from 3-8 p.m., every Friday through Sept. 27. Stephanie Quiroz/staff photo
New Bothell Friday Market opens

Bothell Friday Market will run every Friday through Sept. 27

Kiddie Academy locations on the Eastside win national recognition

Six locally owned educational child care centers received an award for brand excellence and customer service.

Selection and steady sales characterize local market

Buyers can enjoy additional selection this summer as they look for the home of their choice.

From left: Craig Olson, Joan Schrammeck, and Paula Paula DelGiudice with a solar panel. Stephanie Quiroz/staff photo
Little Bit in Redmond goes solar

Northwest Electric and Solar (NWES) of Kenmore donates a solar energy system to the therapeutic riding center.

Microsoft reveals project criteria for $500 million affordable housing funds

The company will soon accept applications for projects related to affordable housing on the Eastside.

Local real estate market brings more opportunities for buyers

Homebuyers are also benefiting from lower interest rates, which are currently are less than four percent.

Maurita Colburn, the chamber’s Member and Community Relations manager, welcomes Country Village owner Leeann Tesorieri as she receives a standing ovation from local business owners. Kailan Manandic/staff photo
Bothell Kenmore Chamber honors Country Village

The chamber awarded Country Village owner, Leeann Tesorieri, as member of the month.

Kailan Manandic/staff photo 
                                Bothell’s newest animal hospital opens with a joint celebration hosted by the Bothell Kenmore Chamber of Commerce.
Twin Pines Animal Hospital offers new vet services in Bothell

The animal hospital had been operating in the community for years before opening a new location.

The data visualized here was compiled from Apartment List’s monthly rent reports. See an interactive chart below. Kailan Manandic / data illustration
Eastside rental market could balance out with the region

Eastside rent medians increased by 2.8 in the past year, a decrease in growth from previous years.

Bothell’s Country Village opened in 1981 and offers around 40 small businesses a place to operate. It was thought to be closing this month, but recently announced shops will remain open until June 1. Aaron Kunkler / Bothell-Kenmore Reporter
Country Village announces some shops will remain open until June

The well-loved village announced the two-month extension for certain businesses two days after its supposed closure.

Work crews construct the first floor of Kenmore’s newest downtown development, the Flyway. The building is adjacent to the Hangar, Kenmore’s community center, and will be a mixed retail and residential space.
Kenmore’s newest downtown development breaks ground

The Flyway broke ground last week and aims to complete construction by February 2020.

Aaron Kunkler / Bothell-Kenmore Reporter 
                                Country Village is home to more than 40 local businesses. It is unclear whether these shops will secure new locations in Bothell before the center closes in April 2019.
Country Village closed after hosting local shops since 1985

The Country Village hosted about 40 local shops and restaurants before closing on March 31.