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How the Political Climate Will Impact Businesses in 2017

The November election of President Trump was an important event in U.S. politics — primarily because it proved a lack of predictability on the political scene. As CNN notes, predictions were completely shattered and polls were discredited. Often, the business world is very sensitive to changes in the political climate. If you are pursuing your MBA degree online, it’s important – now more than ever – to understand how political events impact the work and success of America’s businesses.

Here are four ways the current political climate is expected to impact businesses in 2017.

The American political system impacts businesses – especially in 2017

1. The Economy Could Grow

Generally speaking, a country’s political climate and its economic environment are connected. The stock market, for instance, can behave differently based on political events. As research presented by Charles Schwab reflects, “there does appear to be some correlation between the action of the stock market and the four-year period that extends from one presidential election to the next.”

Even though the political scene is tense in the aftermath of President Trump’s victory, business owners are hopeful that the president’s bold fiscal stimulus plans — including tax cuts and increased spending — will boost the economy. As the Washington Post notes, the Federal Reserve has already raised interest rates in anticipation of the changes – with plans to raise them again later this year.

Some are concerned, according to the Street, that any delays in President Trump’s “pro-business plans” could negatively impact the stock market.

2. Regulatory Standards May Change

According to the American Enterprise Institute (AEI), a nonpartisan public policy research institute, one negative impact on a country’s economic performance is the expansion of regulatory oversight. In layman’s terms, too many government regulations negatively affect a country’s economy. President Trump has vowed to relax regulatory standards and consolidate the current number of regulatory bodies, leaving businesses hopeful that the aforementioned economic growth in the United States could be restored to the historical 3 percent average.

3. Political Stability May Decline

Political stability directly affects business health. And while President Trump’s fiscal stimulus plans and expected deregulation offer hope to businesses in the U.S., the president’s pattern of drastic and inconsistent policymaking (and propensity to tweet about it) does not. According to Fox 5 San Diego, his recent ban on immigration, for instance, as well as his abandoned trade agreements and his promises to build a wall on the border, has created a sense of uncertainty that could negatively impact businesses in 2017. This is especially true for those that operate across borders.

4. Businesses Will Face Growing Risks

Risk mitigation is of paramount importance for a country’s businesses to thrive. Many factors affect a country’s risk profile, but according to the World Economic Forum, some of the top global risks for 2017 include the following:

1. Changing climate
2. Rising cyber dependency
3. Increasing polarization of societies
4. Rising income and wealth disparities
5. Growing middle class in emerging economies

These are all issues that were sources of debate in the presidential election cycle. They will continue to be risks that President Trump will be faced with mitigating as he develops policy.

The 2017 Political Climate

It is difficult to forecast what the president’s next move will be. If managed properly, America’s economy, and therefore its businesses, has the potential to remain strong (and even grow stronger) under the current president. Current business leaders are watching as President Trump makes his next move.

As a future business leader, it’s important to recognize the influence of politics on business stability and success. If you are interested in the future of business and the factors like these that impact it, learn more about how an MBA degree from Washington State University can help you advance your career.

Sources

https://www.aei.org/publication/regulations-are-a-really-big-drag-on-us-growth/

http://www3.weforum.org/docs/GRR17_Report_web.pdf

http://www.cnn.com/2016/12/19/world/2016-review-revenge-of-the-forgotten/

http://www.schwab.com/public/schwab/active_trader/trading_insights/research_analyze/presidents_politics.html

https://www.washingtonpost.com/news/wonk/wp/2016/12/14/federal-reserve-expected-to-announce-higher-interest-rates-today/?utm_term=.3f6a93bbdb08

https://www.thestreet.com/story/13971654/1/political-risk-can-slam-this-market-cramer-s-mad-money-recap-monday-1-30-17.html

http://fox5sandiego.com/2017/01/19/trump-presidency-brings-uncertainty-for-cross-border-business/

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