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Following his victory in the U.S. presidential election, the sector is entering a period of widespread uncertainty as it nervously waits to see which of his policies - especially his more extreme ones - will actually become law.
“There’s almost no visibility into what, practically, will be enacted by Congress” once Trump is sworn in, said Bridget Weishaar, a retail analyst at Morningstar Inc. “Any retailer has to be in the game for the long term.”
What’s clear is that if his proposals restricting immigration and trade are implemented, it could have a profound impact on the retail segment of the U.S. economy, according to a recent 65-page report from Morgan Stanley. Analysts and economists studied both the effects on American consumers and the companies that serve them, from fast food to casinos. They concluded that if Trump’s proposals are enacted — even with individual tax cuts — they would likely do significant damage on both sides of the cash register.
“Elevated economic policy uncertainty, as well as a possible deportation-linked decline in consumer demand and labor under a Trump presidency would counteract the consumer spending benefit from lower taxes,” according to Morgan Stanley U.S. consumer economist Paula Campbell Roberts.
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