OUTSIDE THE BOARDROOM What will Trump do? Forecasts are bound to be wrong
Dozens of experts are sending out emails claiming to know exactly what President-elect Donald Trump will do on any given topic.
“How Trump will change the energy industry.” “Trump, health, trade plans pose risk to states, locals.” “Business lawyers on Trump effect.” Those are some of the emails I’ve received last week, and then there are the hundreds of media pieces on “What a Trump presidency means for you.”
Savvy readers will remember that Trump takes pride in being unpredictable.
Yes, we all have questions about what a Trump presidency will mean for us. And it’s only natural that so-called experts want to answer those questions for us, while promoting whatever they are trying to sell.
Patience, young grasshopper, patience.
What’s true on the battlefield is also true in politics. No plan survives first contact with the enemy. After that, you’re improvising, and Trump loves to improvise.
University of Houston economist Bill Gilmer, the Houston business community’s favorite oracle, summed it up best when he said the president is a lot like a quarterback. He takes the credit for everything, even when it’s the linemen who made the game.
Many of these expert predictions are showing up in the stock market. The prospect of Trump rounding up millions of immigrants for deportation has sent private prison stocks higher. The expectation that Trump will quickly repeal Obamacare has sent health care stocks lower.
Fitch Ratings predicts trouble for state governments and the holders of their bonds.
“Trump’s proposal to convert Medicaid funding into a block grant program would lead to much lower federal funding to states,” Fitch Ratings reported. “A Congressional Budget Office assessment of earlier Medicaid block grant proposals projected declines of between 4 percent and 23 percent in federal funding over 10 years.”
All of this is pure speculation. Trump has refused to reveal any details of any of his plans, he values unpredictability in negotiations, he lacks experience in passing legislation, and he’s facing off against thousands of lobbyists in Washington who can play Congress like a piano.
In other areas, like energy, the global economy plays a much larger role because the sources of all new demand for petroleum products are coming from emerging markets. Trump can’t do much more than save U.S. producers a few pennies per barrel in regulatory compliance costs.
Trump’s desire to be unpredictable, though, also creates problems. First, he’ll find that his supporters want him to do exactly what he’s promised, not make deals. He risks deeply disappointing them, and if he does, his fellow Republicans will have no reason to follow his lead any longer.
Second, businesspeople and markets hate unpredictability. They need to know that government policy will remain consistent within a narrow range of possibilities. Big surprises mean volatility, and nothing discourages spending and investment more than that.
I’m not taking the bait on anyone’s predictions, thank you. I’ll wait to hear from Trump himself, then see what he can actually deliver.