Welcome to Curious Business
Every Friday, I post a small insight into running Curio City and/or Blue Hills Editorial Services. My most recent posts are directly below. You can also start with the first post, or use the subject labels to the right to home in on particular topics. Feel free to comment on anything that interests you.
Friday, November 11, 2016
After the Trumpocalypse
On Wednesday, voters awoke to a vastly different America than we had been led to expect as the Electoral College once again overturned the will of the urban majority, routing the Washington establishment and setting up uncertain but seismic change for the next four years. Since I occasionally weigh in on politics I'm going to comment from the perspective of a (liberal) nano-businessman. I shall endeavor to avoid the histrionics that you can find aplenty elsewhere and focus on economics.
First, the stock market didn't crater as many had expected it to do; on the contrary, the Dow set a new record. The investor class stands to do pretty well from infrastructure and military spending hikes, massive tax cuts, and corporate deregulation...if those are, in fact, coming. We can only guess at what next year's federal budget will look like. Even while basking in its unexpected victory, the Republican Party is far from united, and those cracks will grow when the new president is sworn in. Donald Trump is promising massive deficit spending. The Republican Party's lodestar has long been the Paul Ryan budget plan that seeks to balance the budget by cutting Medicare and Social Security. Without knowing whether the big spender or the deficit hawk will prevail, we can't predict what's going to happen to the economy.
The biggest other wild card is Trump's threatened trade wars. If the flow of cheap imports gets choked off prices will rise while selection constricts; as our trade partners retaliate, exports get choked off. Again, we don't know if he will really tear up treaties and provoke China or if that was just campaign bluster.
"We just don't know" comes up over and over again. Trump is neither a Republican nor a traditional conservative, so the usual GOP agenda is not a blueprint. We do know that, since World War 2, the economy has performed better under Democratic administrations by all objective measures (nine of the last 10 recessions were under Republican presidents). There's nothing ambiguous about those numbers, and your own experience bears them out: Surely you can remember that George W Bush left behind a flaming ruin; Barack Obama put out the flames and tidied up the wreckage. The ensuing recovery has been long but sluggish and only recently started to benefit the middle class. That's going to change next year, one way or the other. Spending $1 trillion on legitimately needed infrastructure improvements would certainly produce a growth spurt for a year or two before inflation and the exploding debt choke it off; Ryan's austerity would quickly bring a recession. Even if Trump's plan makes it through Congress, it's unclear how much stimulus an already-growing economy can absorb, particularly since we are already near full employment. Would a burst of overheating lure enough sidelined people back into the workforce? Will we have enough immigrants to take up the slack, or are we going to have to replace them, too? Self-driving trucks will soon render 1.9 million professional drivers superfluous...but how soon? The more deeply one delves into the future, the more questions one raises.
But you're wondering how all of this will affect Curio City. I'm hedging my bets. Just last week I wrote about how environmental regulations might have indirectly signed my store's death warrant, and that's squarely on the Democrats. The tired old GOP agenda embodied in the Ryan budget would be terrible news, but I think the danger of that passing is low. Trump's own policies are vague, as is his level of commitment to them. I'm not even going to go into the implications of ending Obamacare, but they're going to be major. Trump's fantasy wall and anti-immigration stance will certainly be important if they really do play out as threatened. The only sure thing right now is uncertainty. I am not jumping on the impending-disaster bandwagon; in some ways, I'm even cautiously optimistic.
Curio City is too tiny to be affected very much by macroeconomic trends, except insofar as general conditions encourage people to spend or hoard their money. And most of Curio City's merchandise comes from China, so the potential trade wars loom large. My best year ever was 2008, when the Great Recession was wreaking havoc. One could draw a contrarian conclusion and say that hard times somehow help my business. But that, too, is a stretch. I am not rooting for recession. Right now, I'm just hoping for Christmas.
Instead of bringing in the $1,000 worth of Christmas sales that I expected, this was quite possibly the worst November week ever. Is that the election's fault? Probably not; a $600 lighted beanie sale that I had last year wasn't repeated this year. Christmas is just getting off to a very poor start, and it's a stretch to blame our national political crisis for that.