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How Will Presidential Politics Affect Business Dynamics?

Americans are prospering. at least according to the stats.
Luis Aureliano is a business writer and financial analyst. With over 15 years of experience in global finance and an MBA in economics and management, Luis’s areas of expertise include business, marketing, communications, personal finance, macro economics, stocks and emerging markets.
Luis Aureliano is a business writer and financial analyst. With over 15 years of experience in global finance and an MBA in economics and management, Luis’s areas of expertise include business, marketing, communications, personal finance, macro economics, stocks and emerging markets.

The political posturing of Democrats and Republicans has whipsawed violently since the November 8 presidential election. We have seen a rancorous election season culminate in the unprecedented rise of Donald J. Trump to the highest office. Trump’s election – like him or loathe him – is the stuff of legend. It is the story of a neophyte political contender stepping into the ring with the heavyweight champion. The irony that the soundtrack from Rocky films was blaring after the House narrowly voted in favor of a new health care bill is not lost on those who supported Trump. He is the political outsider that pundits never gave a chance to. He is the cantankerous old crank with a fondness for gluttony and bluster. The scandal that envelops the Trump White House is likely to remain throughout his four years in office, perhaps even extend to his second term in office?

What is clear is that Trump gets shot down at every opportunity. In fact, his life story is not dissimilar to his presidency. Like a Phoenix rising from the ashes, he knows what it feels like to be singed and written off for dead, only to rise again. Whether he can pull off a miraculous feat with his presidency is anyone’s guess. The liberal-leaning media has no time for him and routinely runs negative headlines about every aspect of his presidency. Trump must take credit for his unscripted ramblings and offensive remarks. But at heart, Republicans believe he has certainly put America first in his dealings. Many Democrats and independents felt the same way when they elected him in Rust Belt states across the nation. For Hillary Clinton to bemoan her fate and blame the Russians and Jim Comey for her loss is shameless and baseless. She lost because she had no credibility with voters.

How Does Presidential Politics Affect Businesses?

To coin a Trumpism – bigly. Everything about Trump’s presidency is great, and it is going to be great if it isn’t great already. Jokes aside, Trump campaigned hard on bringing economic prosperity back to the US. He has highlighted this at stump speeches across the nation, from the West Coast to the northeast. His primary objectives include decreasing corporate taxes to 15% (Speaker of the House Paul Ryan believes 20% is more doable), reducing regulations, repealing and replacing Obamacare, tightening up America’s borders, and imposing changes on NAFTA et al. These are ambitious undertakings that are unlikely to gain traction in the swamp of Republicans and Democrats controlling Congress. That Trump managed to rack up 217 votes to pass legislation in the house on healthcare is a monumental achievement. Whether it passes in the Senate in its current form is debatable.

But there is something more important to consider: business confidence. As it stands, the US economy is operating at record levels of employment. The unemployment rate plunged to 4.4% as US job growth rebounded sharply in the last report. This bodes well for Trump, given all the opposition he has been subjected to since he came to office. This is also the lowest jobless level in over 10 years, indicating that the US economy is resilient and bullish. While wage growth remains modest, incomes are rising greater than the inflation rate. Naturally, the great political divide between Obama and Trump supporters remains in effect, but the point is that Americans are prospering according to the stats. Not all businesses feel similarly however. There is a lag effect that remains in place with businesses that were struggling under the oppressive burden of high taxes, significant regulation, Obamacare and other constraints imposed upon them by government.

How Poor Credit Affects Businesses in the US

Many of these businesses have poor credit, and they need options to prosper in a new economy. Applications for bad credit loans have been increasing in recent years, owing to the sluggish job growth we saw towards the end of Obama’s presidency. The despondency that the electorate felt resulted in Trump’s election. Credit scores under 700 are typically regarded as acceptable for small business administration loans, while credit scores under 500 will likely disqualify businesses from receiving loans at all. The Trump White House is working to reduce the burden on small businesses by decreasing the prohibitive tax rate (top end at 35%) and deregulating the corporate sector to make it easier for businesses to prosper. When these constraints are removed, we will likely see an increase in profitability and cash flow for US businesses.