February 2017 Vol. 72 No. 2
Editor's Log
Trying To Gauge The Trump Bounce Effect
by Robert Carpenter Editor-in-Chief
Before the November presidential and congressional elections, remember how all the so-called financial experts and talking heads kept telling America that if, by some fluke, Donald Trump was elected president, the stock market would plummet, the economy would slow and markets would stagnate due to the undefined nature of his policies and direction?
Further, many economists predicted that commerce in general would suffer as the unpredictable and somewhat radical position statements made by Trump – including relationships with foreign trading partners – would isolate America. Businesses would most likely hasten their departure to foreign lands for manufacturing, the so-called experts believed.
I freely admit that it is way too soon to see if Trump’s plans succeed in the long term. His concepts represent a certain amount of risk and an unknown quantity of reward. Will the new president and Republican Congress be able to work in a cooperative, productive manner? Just how effective will the Democrats’ minority be in their efforts to hang onto their traditional liberal legacy? It’s a lot to be determined amidst much uncertainty.
But there’s also a lot to be said for hope that accompanies fresh direction, new ideas and positions reflective of Americans outside of traditional, glamour centers like California, New York City and Chicago.
Interestingly, Wall Street and the financial markets adjusted quickly. Indeed, following Trump’s election, the stock market experienced a very brief decline (the blink-and-you’ll-miss-it type of decline) and then strongly rallied to bring the markets up to record levels. While the rapid boom slowed, the markets, at the time this column is going to press, have displayed stability as if they, too, are waiting to see what the future will behold. There has not been a mass exodus to move manufacturing to other countries. In fact, famously Carrier decided to hold onto 1,000 U.S. jobs and other major corporations are actively re-evaluating their justifications for leaving the country.
Ironically, these so-called experts that predicted a Trump win would mean disaster for the stock market have quickly moved on and are grasping at a new theory: that a newly elected president typically receives a positive “bounce” from both markets and the public. In trying to trivialize the significance of Trump’s election, they theorize that the Trump bounce is lower than the norm so that probably bodes poorly for the country.
I don’t buy that, but in all fairness, we are in new territory here with President Trump representing a very different approach to government. But there is no denying that there has been a very positive business bounce for underground infrastructure markets and others.
I’ve spoken with many manufacturers and contractors since November and they all have reported a striking increase in business just since the election. Business activity for markets such as sewer, water and HDD suffered through a somewhat dismal 2016 until the election. Call it hope if you will, but the business climate for underground infrastructure seemed to flip on a dime post-election, and promise for a good 2017 is suddenly more prevalent.
In this issue, we publish our 20th Annual Municipal Sewer & Water Survey in which municipal officials are queried regarding a variety of issues. Foremost among the results are spending projections. Not surprising, the Trump bounce was apparent with municipalities as well. After seeing their spending drop substantially in 2016 – despite assurances from then President Obama that all was well – cities, like much of the country, disagreed and were reluctant to invest despite overwhelming needs. Now, most of the muni survey respondents anticipate that their budgets will rebound somewhat in 2017, roughly 5.2 percent overall.
If Trump and Speaker of the House Paul Ryan’s grand $1 trillion infrastructure plans are developed, it will still take time to see positive results trickle down to actual implementation. But even slow growth with a genuine promise of steady, future benefits would be a welcome tonic to the long-suffering sewer/water industries.
But we, as an industry, can’t afford to sit back and assume that we’ll get our fair share of funding. As always, roads, bridges, air and rail industries are posturing to capture the lion’s share of whatever funding benefits materialize. Industry organizations will be tasked with bringing the spotlight upon the plight of decaying or inadequate sewer, stormwater and water infrastructure. It will be their responsibility to rally together and present a compelling case for the absolute need to invest heavily in the forgotten underground utility infrastructure.
It typically takes up to two years for a new president’s policies to have any kind of significant impact. But if we see progress in 2017, we could be in for exciting years ahead. Let’s hope the Trump bounce continues.
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