Market Insights November 15, 2016: A Preliminary Outlook on the Economic Impacts of a Trump Presidency

by | 15 November 2016


  • Any forecasts of impacts from the Trump Administration must be viewed as extremely preliminary, and the actual effects will ultimately depend upon the extent to which Trump’s campaign proposals are enacted.
  • Trump’s planned stimulus package of tax cuts and infrastructure spending in early 2017 could provide a mild boost to employment and economic growth in the second half of 2017 and into 2018. But these gains are widely expected to be at least partially offset by greater inflation and higher interest rates.
  • The impact of Trump’s broader economic platform raises more uncertainty. The planned business-friendly policies to reduce regulation and lower taxes can be expected to further stimulate economic growth, while the anti-globalization measures to reduce imports and net in-migration threaten to reduce economic growth in 2018 and beyond.
  • On balance, these policies materially raise the odds of a recession by 2019, though much depends on the extent to which Trump’s economic plank is ultimately adopted.
  • Impacts on the property sector should broadly track these economic trends, with moderate leasing gains in the office and perhaps industrial sectors in 2017, yielding slower negative absorption as economic growth moderates and then falls during a recession.
  • The industrial sector would be further hurt directly by reduced trade flows, with some offset from greater domestic manufacturing and energy production.
  • The impact on the housing market remains more uncertain, as greater consumer disposable income from lower personal income taxes would be offset by higher interest rates and job losses during the recession. Benefits to renters and the multifamily market likely would be less, as expected tax cuts will be weighted to more affluent households, who tend to be homeowners. The impact on the retail sector would be similar, with the additional direct losses from lower, more expensive imports.
  • Finally, expect a hit to real estate capital markets, as property fundamentals weaken and interest rates rise, particularly if foreign sources reduce their U.S. investing in the event of global trade wars.


Andrew J. Nelson is Chief Economist for Colliers International in the United States. Based in San Francisco, he covers a mix of general economic topics as well as related issues that bear on the performance of property markets.

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