Small Business Thoughts in the Trump Era
As a small business owner (24 employees), our little company has been on a roll since starting in 2010. We are profitable and growing with thousands of happy customers and growing market share. My tendency has been to continue to invest in the business because the fundamentals are so strong.
For me, Trump brings uncertainty in several ways:
I wonder if other businesses will be a bit cautious on spending and investments until there is more certainty on the moves he will make. That could cause some headwinds that could push us more towards a recession.
While I have been in favor of more government spending, the coming tax cuts promise to be less efficient in terms of the multiplier effect of fiscal intervention. The basic concept is that money going to rich people will not be spent very quickly and therefore does nothing to improve the velocity of money, which is a primary factor in the slow recovery over the past 7 years.
Also, between the tax cuts and Trump’s promised infrastructure and defense investments there is uncertainty around what will happen with interest rates, and the long term impact of the federal budget deficit. While I am not overly concerned with the budget deficit with such low interest rates, and increase back to 5% is another recessionary risk factor.
So I will be delaying hiring and investments over the next 6 months to see how things start to evolve in this new era.