New Constraints and Opportunities in 2017

Parker Associates - November, 2016 Newsletter Photo - What's Ahead in 2017

The conclusion of the 2016 nationwide election in the United States of America will hopefully return us to the American practice of goodwill toward all men and women. However, the many difficult issues raised during the election campaign will require many congressional debates during the coming year to achieve difficult decisions at all levels of government. My November blog summarizes these issues and the likely outcomes for all residents.

Perhaps the three most contentious issues facing President-elect Trump and the Senators and Representatives taking office in January are three pieces of legislation proposed by the Obama administration and expected to be introduced before the end of the current year: (1) making it easier for green card holders to take new jobs, including automatic extension of 180 days for a work permit that is about to expire (a change strongly opposed by government representatives of many employers);  (2) allowing some foreign entrepreneurs to extend their residency in the United States by  up to two years, a change which would make it much easier for recent graduates holding high-tech positions as well as  inventors, researchers and creators of business start-ups; and (3) awarding federal contracting preference to firms deemed model employers, defined as those that pay a $15 per day minimum wage, recognize unions and offer health coverage to all employees. All three of these programs are expected to be opposed by republican members of both chambers of Congress.

Economists project that earnings should increase in the fourth quarter of this year after a third quarter of earnings similar to those in the third quarter of 2015. This result should be exceeded in the first quarter of 2017 creating 13 percent annualized growth and resulting in investment rising by 4 percent in 2017 and corporate profits showing improvement nationwide. However, these projected improvements will encourage the Federal Reserve to increase its federal interest rate to financial institutions as a hedge against inflation.

Rising interest rates in the United States will stimulate further increase in the value of the dollar, an increase expected to be considerably lower than the 20 percent gain since 2014, probably in the 4-5 percent range.

According to Kiplinger, the fiscal health of many state governments will increase state income and sales tax revenue which, however, is likely to be offset by pensions and Medicaid. States must set aside 35 percent of their budgets to meet mandatory spending requirements, an increase from 28 percent prior to the 2008-09 recession. This set aside mandate will rise to 35 percent by 2020, and up to 40 percent by 2025.

Although the post-recession labor market has improved, skilled workers are in short supply for many industries, causing difficulty for expansion potential. This shortage is especially acute in the construction business, frequently causing slowdowns in expansion plans for industries requiring new buildings. Midwage jobs in the $30,000 to $60,000 annual wage have been affected, leading to weaker consumer spending power and future growth.

On the brighter side, experts project improved U.S.—Israeli ties with a new president not hindered by personal dislike between Obama and Israel President Benjamin Netanyahu. Concurrently, Israel’s relations with Arab neighbors are already improving as a result of the terrorism in neighboring countries leading to new Israeli policy relationships.

In sum, 2017 will reveal many new ideas and creative programs at the local, state, national and international levels. Agreements and disagreements will lead to new potentials for improving our nation and our world. It promises to be an exciting time to be alive and well.


by Dr. David Forster Parker
November 10, 2016
For more information, contact Dr. David F. Parker
or go to our web site at www.parkerassociates.com

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