Despite the gloom and doom rhetoric of the presidential campaign, the economy is looking good, according to Brad McMillan, chief investment officer of Commonwealth Financial Network.
The good economic news will probably continue into the future and will be advantageous to investors, he adds.
He says investors should not get caught up in either the positive or negative emotions left over from the election, but should stick to their investment plans for the long haul.
McMillan offered an analysis of factors affecting the economy and the markets during a conference call Tuesday, acknowledging that few people foresaw Donald Trump’s victory or a Republican sweep of Congress.
Whatever happens in the future, right now the economy is in good shape, he says, with good job growth occurring in a sound economic environment. However, that has not translated into improved consumer confidence as yet. Both housing and business investment is already coming back.
“All of the pieces of a good economy are falling into place. Government spending is the only sector that has not come back,” says McMillan, who discussed some of the factors affecting the economy and investors.
Trump has promised tax cuts, but if the cuts are for upper income individuals it will not be as much of a boost to the economy as it would be if the cuts were for middle and lower income people, because they spend more of the money, he says.
Imposing tariffs on goods from other countries or doing away with trade agreements, which Trump has said he wants to do, would mean higher prices at retailers in the United States and would hurt exporting countries like China, McMillan says.
Trump has promised trillions of dollars for infrastructure improvements, which would boost the economy, but it is doubtful the Tea Party members in Congress will allow deficit spending. “It will be interesting to see what happens with the items on which the Republicans disagree among themselves,” he says.
For federal interest rates, Trump has contradicted himself, saying he wants both low rates and high rates. He has also been critical of Federal Reserve Chair Janet Yellen, who said in the past she might resign, but has now said she will keep her position. “Her move asserts the Federal Reserve’s independence from the presidency and points to more rate increases rather than fewer,” says McMillan.