In a country that has long operated with two primary political parties, America now seems to have at least four groups pulling for power and influence in the U.S. government. Republicans are separated between those that are in the Tea Party/Freedom Caucus group and the others, who might be considered the moderate Republicans. Democrats have their moderates, also, who are being pulled to the left by the Progressives.
With all of that push and pull, and with no one willing to cross the invisible lines of party politics, a great amount of talking leads to very little actually getting done. Such dysfunction appears to be having an effect upon the economic outlook of Americans, who watch and wait for more effective governance.
Spectrem Group’s monthly survey of affluent investors indicates that reaction to the political quagmire in Washington, D.C. Asked to cite the news story that is most affecting their economic outlook, 54 percent of respondents said “political environment’’ and no other topic even came close.
Being selected by more than half of investors is an indication of the seriousness of the problem, but in November of 2016, 83 percent of investors selected “political environment’’ as the key factor. That was at a time when the country was still getting over the election victory of Donald Trump.
There has been an increase in investors’ concerns over taxes, perhaps in light of President Donald Trump’s promise to revamp the tax system and his initial proposal about a new tax plan. Fourteen percent of affluent investors said taxes were the story in the news most affecting their outlook on the economy of the United States. That is more than double the 6 percent who expressed concern over taxes in February, when the question was last asked.
Because the question is asking the No. 1 choice, the jump in “taxes’’ as a response was matched by a corresponding drop in “stock market conditions’’ as a concern, from 9 percent to 2 percent. There was, however, a slight increase in concern over “international problems’’ from 3 percent to 6 percent in the three-month period.
Over the past two years, few topics have ever garnered more than 20 percent of investors’ selections. Back in August of 2015, when ISIS was in the headlines every day, “international problems’’ was selected by 38 percent of affluent investors.
With continued struggles over a new health care bill, the tax reform issue and now a new budget plan offered by President Trump and roundly criticized by both sides of the political spectrum, the political environment is not expected to improve.