The financial world is awaiting the real President Donald Trump to show up, according to one well-known television expert.
Angus Watt, managing director, Individual Investor Services, National Bank Financial, CEO & Partner, Angus Watt Advisory Group gave his 2016 economic review and 2017 preview at the January 18 Wetaskiwin Regional Chamber of Commerce luncheon.
“How could we not talk about Donald Trump?” asked Watt, known as a Global Edmonton television personality, as he began his presentation to an overflowing room.
Before he got into the new president, Watt gave an overview of the previous economic year. He said even though Alberta has seen economic difficulties lately, looking at the big picture is key. He said, looking at the economy from 1998 to 2017, a huge gain has been made and, overall, the future economy looks bright.
“The world economy is ready to take off to the next level,” said Watt.
He noted that commodities are doing very well in price with potential for a lot of upward growth. He also stated demand in China for virtually all resources is huge; China is now the second biggest economy in the world, behind the United States.
Another standard indicator for economic health is housing prices, which haven’t dropped much in Canada. “The price of homes really hasn’t sold off that much,” said Watt. He said the housing nationally and internationally seems just fine. With low interest rates, housing prices on a global basis are growing.
Employment is another important economic indicator stated Watt. He said Canada weathered the 2008 recession better than the U.S., but it seems the U.S. recovered and is doing better now than Canada. He said the U.S. is creating jobs and isn’t far from what statisticians call “full employment.” Meanwhile, Canada’s economy isn’t growing and Watt said it’s in fact “moving sideways.”
Watt also stated it’s interesting there doesn’t seem to be a lot of inflation right now, but if some factors, including wages, climb, inflation could rear its head.
Looking at the price of a barrel of oil, Watt said it doesn’t look attractive because the U.S. could easily increase production this year, and Watt said he wouldn’t be surprised if Russia does the same. Watt predicted the price of a barrel of crude oil will hover around $55 in 2017, but could settle as low as $48.
Closer to home, Watt said Alberta’s growth rate is a bit stagnant and there are few indications that will change soon. “We’re not going to take off here,” said Watt. “It’s going to feel like more of the same.”
The thing that concerned Watt most, he said, was the fact Alberta is a young province demographically, and he’s concerned that if the economic doldrums continue those young people will pack up and leave. “If they leave, when are they going to come back?” he asked. “They’re not.”
Watt said factors around the world that may affect economies may have more in common than people think. He used the recent vote in Great Britain as an example. He said the “Brexit” vote, where the public voted to have Britain leave the European Union, is similar in ways to the U.S. electing a protectionist president like Trump. Watt said populations in the U.S. and Britain have aging Baby Boomer populations now that tend to vote in a more protectionist way as they get older. “As we get older, we get more provincial,” said Watt. “That’s the same thing that happened in the United States.
“The election was (Hillary) Clinton’s to lose, and she lost it.”
Watt said some of Trump’s election promises may have unforeseen consequences, such as cutting taxes. Watt noted that cutting taxes too deeply, particularly corporate taxes, could hurt the U.S. For example, he said experts feel a corporate tax of 22 per cent is fair but Trump says 15 per cent is the way to go. That’s a big gap in revenue and could show up in budgets.
Bickering with China seems odd too, as the U.S. has a huge trade relationship with the Asian nation. Trump’s claim that he’s going to renegotiate the North American free Trade Agreement could have serious consequences for Canada, as 75 per cent of Canada’s exports go to America, and 88 per cent of the Canadian auto industry go south.
Watt stated that 2017 is noteworthy too because three more major European elections could see more nations leave the European Union, meaning they’ll stop using the Euro and start using their own currency again. That will have an effect on global markets.
Watt said he enjoys networking with chamber of commerce members and understands the importance of small and local business. “That’s one of the reasons why I’m here,” added Watt.
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