And now for his next trick, President-Elect Trump will attempt to pull a real estate ‘rabbit’ out of the hat of the U.S. Economy! What’s that, you say? Yes, Donald Trump is using his past real estate development model to shape his plan for the U.S. Economy, according to recently published CNBC commentary. Believing that his plan offers the best chance to maintain significant growth in the economy, Trump is treating the country like a real estate development deal, and here’s how…
“Trump promises to cut both corporate and individual taxes while investing up to $1 trillion on the country’s infrastructure. By simultaneously decreasing the country’s revenue and increasing its expenses, Trump would be making a huge bet that the resulting growth will be substantial enough to outpace the buildup of debt, potential inflation and recession that could be the outcome if his plan fails.”
Sounds risky, doesn’t it? Its the kind of bet that has paid off for him in the past, but has also cost him dearly (think Trump Casinos in NJ!). Do you think he’s also betting that his individual tax break plan will put more money in pockets of Americans? Money that we will then turn around and spend in the new businesses that he anticipates will be developed through better infrastructure? Is Donald Trump, in essence, betting on the American people? Regardless of the answer to that question, here’s what you need to know about his plan…
Trump’s real estate background provides him with the outline for how to fix the economy:
- Spend money on the asset using debt
- Make improvements that, when completed, will generate more income (in this case, infrastructure to improve commerce)
- These new improvements will lead to more business, which will generate more cash flow (in this case economic growth)
- The hope is that increased cash flow will outpace the growing debt
With the markets and the people still in a state of shock over the election itself, paying close attention to how to invest will be critical. While we had to be told change was coming in 2008, change is most certainly in the air for 2017. This time, will it be the change we really need or just a lot of smoke and mirrors?
