Monday, February 6, 2017

Economic Uncertainty Is Spiking

Above is a chart of the "economic uncertainty index.  Here is a link to its components and methodology.  

On one hand, it's not surprising that we're seeing a spike in this indicator.  The U.S. has a new president who is very unconventional.  But he also ran as an outsider who could spur the creation of 25 million jobs in 8 years.  Yet so far, it appears his actions are causing economic friction.  For example, today the Washington Post reported that 97 tech companies have filed a brief against Trump's travel ban.  Think about the uncertainty the travel ban injects into business decision making.

From business' perspective, there are several positive policy developments.  Trump is gutting Dodd-Frank, which will lower the cost of complying with regulations for financial companies.  And there is continued talk of a corporate tax code revamp, which, at the very least, will increase net income at the macro level.  

But considering what a wild card the president is, I have to wonder if we'll continue to see this index at high levels for the foreseeable future.