• Leonard Brecken

Trade War & Split Congress

Just wanted to take a moment to make a few comments as we head into 2019 post the elections. The GOP losing control of the House in our view has increased the odds that the Trade War with other countries particularly with China will likely get resolved in the coming year. It's becoming clearer the the "blind economic squirrels" as we head into winter the economy is slowing on many fronts including the beginning signs in consumer spending/retail. With voices getting loader and loader on convincing the Federal Reserve to consider a slower pace of rate hikes in 2019 if nothing else demonstrates this VERY CLEARLY. As we said the Fed is in a "Hike till it breaks cycle" mainly because it has no choice to do so given how tight labor is and how that & growth is beginning to result in wage inflation out stripping its measures of core inflation. Since the administration has lost the house it has little in terms of levers to pull to offset this likely slower period of growth tied to higher rates. The only "Trump" card to excuse the pun is to settle the Trade War which in turn would spur faster economic growth. This will clearly benefit the manufacturing & industrial space as well as banks (as rates rise even further), but put further pressure in areas such as housing & construction. The offset for the latter would be any fiscal spending tied to infrastructure spending hikes tied to Democratic control of the house. That won't affect residential side of housing/construction, but other areas. We have factored all of this it our thinking going into 2019 with no guarantees of course.


The advice we lend to business owners on resource allocation to improve profits is grounded by these economic assumptions as they will affect not only risk but return on those resources. That is why at TheProfitConsultant.me we provide CFO like services that uniquely combine Accounting, Finance & Economic skills to boosting profitability.

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