FTR Analyzes Impact on Transportation from Trump Win

FTR foresees limited short-term impact on the economy and transportation industry due to the presidential election, though notes of the potential for inflation once the new president takes office and begins making foreign policy and trade agreements.

FTR

In a note to subscribers, FTR foresees limited short-term impact to the overall economy and transportation industry in particular as a result of the U.S. presidential election results. Behind this assessment is the fact that the new President won’t take office for 3 months, and then any proposed legislation will take time to move through the legislative branch of government. According to Noël Perry, Transportation Economist at FTR, “There are certainly particular risks that arise any time there is a change in elected power; but there is little near-term change in the outlook for the U.S. economy, as budgets are set and policies are intact until later in 2017.”

Some possible risks to watch for according to FTR:

  • Since the President does control foreign policy, trade agreements with the Chinese and Mexico are likely to be addressed early on in the new administration with the risk of an increase in inflation.
  • Regulations and enforcement will be addressed; and if electronic logging device (ELD) implementation gets sticky because of the FMCSA’s slowness in publishing complete technical standards, the new administration is much more likely to postpone the December 2017 deadline. That said, trucking regulations in general will not be a priority.
  • If a major tax cut bill is in place by summer of 2017, it would likely stimulate the economy and add up to 1 percentage point to GDP growth for as much as a year. At the same time, trade negotiations could stimulate exports and raise the cost of imports, with an acceleration in inflation likely. That may force a significant raising of interest rates by the Federal Reserve, making recession in late 2018 or 2019 a distinct possibility.

FTR does not expect to change its industry forecasts based on the election results but will be monitoring any activity that may cause an adjustment and will continue to advise subscribers accordingly.

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