This week, metals manufacturers, construction and automotive companies and even the Federal Reserve expressed optimism about the strong economy we’ve seen since the election of President Donald Trump.
We love economic optimism as much as the next metals intelligence and price data service, but count us among the many who wonder if all these happy thoughts are based on real world data or just, well, feelings?
When Can We Get an Actual Bill?
We kind of expected to have at least something concrete (pun intended) out of the administration on infrastructure by now but even the most optimistic among us concede that an infrastructure bill might not even happen this year with a healthcare repeal currently sucking up all the oxygen in Washington and tax reform, supposedly, the next big hurdle.
The Fed raised interest rates a quarter-point this week and hinted at more rate increases later in the year, pointing to strong jobs and manufacturing data but the tax cut the administration promised looks like it will only happen after the Summer, if at all, this year.
Automakers got some good news this week in the form of a promised review of corporate average fuel economy emissions standards that the industry says will hurt sales and production by the time they’re fully implemented between 2022 and 2025, but the actual rules haven’t changed yet and no one knows what the final review will keep or cut.
All of this begs the question: Are we being too optimistic?
While Trump’s budget blueprint cut construction TIGER grants that fund many transportation projects, including the New York-New Jersey Gateway, it did allocate $2 billion toward the design and construction of a wall between the U.S. and Mexico. That’s not what many construction companies were planning on hearing.
“Looked at in the absence of any broader infrastructure plan, it is hard not to view proposals to eliminate programs like the TIGER grants and wonder how such cuts are consistent with the President’s oft-repeated pledge to invest in infrastructure,” the Associated General Contractors of America Executive Director of Public Affairs Brian Turmail said.
We, too, would like to see the text of actual infrastructure and tax reduction bills from the administration before we predict continued economic growth or even a continuation of the metals bull market. Or at least a working framework. With the pace in Washington, many of the president’s priorities are going to have to move to year two and delays beyond that would further threaten action in this term.