May 17, 2017, © Leeham Co.: The US airline industry remains uncertain where the Trump Administration is going, said Adam Pilarski, chief economist of Avitas Aviation, at the annual Airfinance Journal conference in New York.
“There are huge differences between candidate Trump and President Trump,” he said. China was not declared a currency manipulator. There is no border wall. The US embassy has not been moved to Jerusalem. Trump now supports ExIm Bank and NATO.
“Let’s not get too involved in what he said, because he didn’t mean it,” said Pilarski.
Pilarksi noted that there are a “plethora” of billionaires and generals in the government (and as aside, he observed there have been 12 generals who went on to become president).
The Trump administration is pursuing a zero-sum game in which the US is total unpredictable.
“This is a good strategy if you play a zero-sum game,” Pilarski said.
Pilarski predicts there will be bigger budget deficits and increased inflation from Trump. There might be more productivity and fewer regulations.
Manufacturing jobs are not coming back to the US.
“Forget it, it’s not going to happen,” Pilarski said. Boeing will be using fewer workers because it will increase technology.
There will be little change in Open Skies because the government stops new competitors (witness the multi-year effort by Norwegian Air to serve the US).
Profits at US airlines will decline, Pilarski predicts.
The proposed Border Adjustment Tax is nothing more than a tariff and bad idea, Pilarski said.
The proposed reduction in corporate incomes taxes will lead to larger deficits and harm the economy, he predicts.
Notice to Readers: Although Pilarski’s presentation is about Trump, this does not give you freedom to engage in gratuitous commentary. Keep your discussion to the policies, without descending into insults, either about Trump or toward each other.
My view is that the world economy is unbalanced at present and the geopolitical environment is so fluid that we are willing to assign to Trump a whole host of uncertainties that already existed. Simply we can expect a correction or significant economic slowdown as economic woes continue to build. The core competitive advantages are still based predominantly around where higher economic growth is expected within the world and much as commentators like to say otherwise Mr Trump is powerless to affect those long-term trends. The administration could make life more difficult at the margins for international flights starting or ending in the US but that is about it.
This is my view as well. The real effect that the US President has on the US economy, let alone the world economy, has been grossly overstated for decades.
I have to disagree.
As we saw under Bush, unrestrained capitalism can destroy the eocno0mly.
A more regulated one with rules that protect from that recovered it under Obama (or more accuracy allowed it the chance to recover and has restrictions that keep it between the ditches if left in place will keep it from veering to far off track).
Not that there won’t be ups and downs but trying to emulate the great depression was as close as I want to come to experiencing that piece of history.
You can believe what you want, but try typing “what effect does the president have on the economy” into Google and read the articles that come up. The first page of them will all say that the president has much less effect on the economy, especially immediate effect (economy, not stock market), than the public chooses to believe or the political pundits proclaim. Every financial advisor I’ve ever talked to, as well as any non-political economic commentary that I’ve ever read on the subject, will tell you the same thing.
“Unrestrained capitalism” under Bush? Hardly. Regardless blaming Bush is simple scapegoating as there were many hands in the crash…
But I agree with Mike, the best the President can at best only nudge the economy but they get the undeserved blame and undeserved credit.
Day in day out I agree.
Its a bit hard to argue what Prime Mortgage situation did though is it not?
That in turn is a direct affect of regulation.
Regulations go in under Democrats and come off again under republicans (I think the latest spate of “executive orders” is impossible to argue with)
Failure to act according to the economists was what lead to the great depression being great (as in large, not make American great again) .
Obama did act (and give Bush credit, he set the ball rolling to act)
So tell me that presidents can’t have a direct impact in a dire situation.
Dodd Frank is a mechanism to preclude that.
Again the economy will go up and down regardless, but how bad it is?
Yes I think that is under the Presidents leadership (also granted it takes legislative action to enable that)
So, if there had been an effective environment where Prim Mortgages were ruled illegal rather than allowed?
“Irrational exuberance” does exist.
I know that when Trump was elected I moved a larger portion of my retirement funds from interest only to growth stocks.
The stock market doesnt reflect what happens in Main St USA. If the financial sector booms but jobs dont go with that in rural and rust belt areas, there will be trouble for Trump.
Maybe some flag carriers will review their fleet policies, don’t know.
One thing about Open Skies will change; the UK will cease to be a part of it because that agreement is between the US and the EU and will not apply to the UK when the UK leaves the EU. Trump supported Brexit, and if he didn’t support Open Skies one assumes that he’d instruct his negotiating team to agree on something far more restrictive with the UK, that is if he instructs them at all. But what? I’m guessing no-one on either side of the Atlantic has thought much about it, and I’m also guessing that its far less of a US priority than a UK one.
I think sadly you are right.
In normal circumstances it would be worked on as a known oncoming issue
As it stands its going to be a surprise a there is no advance prep that can be done.
Unfortunately like many things its complicated.
Thats strange comments as EU-US Open Skies is heavily favourable to US airlines. Why would they alter it for a UK only agreement?
“The treaty disappointed European airlines as it was tilted in favour of United States airlines: while they are allowed to operate intra-EU flights, European airlines are not permitted to operate intra-US flights nor are they allowed to purchase a controlling stake in a US operator”
US- UK was previously restricted to 2 operators each, but the US benefited by allowing more US carriers. UK only has two long distance carriers, BA and Virgin Atlantic
I do think other jobs will come back, 3D printing is going to have changed things immensely in 15 years (and is now though in it infancy)
Clearly Trump does not have a clue about much of anything let alone an actual Aviation or any other policy (and that is as solid a fact as the Sun Rising in the East so its not an insult)
For Aviation its just work with what is the current tweet that disagrees with what has been announced by various departments, Homeland Sec, DOT, FAA or ………
Sometimes referred to as small ball.
Dink and chip at what you see right now and what is in front of you and hope for the best strategically.
It might be worth getting the Movie “Pray for the Wildcats”
“Its A Mad Mad Mad World” having some good flying scenes and topical as well.
“Manufacturing jobs are not coming back to the US.”
While I believe this to be true, and not only for the aerospace industry, if accurate, it would be a huge problem for President Trump and the Republicans. The President’s unfaltering support seems to come from those people who believe that he will deliver on improving the job market.
His supporters seem ready to forgive almost any failure or controversy, as long as he, in no specific order:
a)Improves on the security situation (what actually needs to be improved is debatable)
b)Builds the Mexico Wall
c)Brings back lots of well paying jobs
d)Repeals The Affordable Health Care Act
So far, he is 0 for 3.
Yes, one can argue that the courts, the Democrats and the members of the Republican party itself have prevented him from achieving any of these goals. This is the way the American Government functions and is actually still working the way the founding fathers had envisioned it. i.e. No rampant major changes being brought about by some maverick. I am not trying to start a debate, but I believe these to be the facts (the courts are there to uphold the laws, not make them and the elected representatives of both major parties are not beholden to the President when voting in their respective chambers).
The point I am trying to make is that, so far he has not achieved any of his main goals in 3 tries, irrespective of why. Purportedly, it is because of the job issue alone that many people voted for him.
I will be surprised if Mr. Pilarski’s prediction concerning bigger budget deficits coms true. With a non spending Republican majority, I would expect that if there are increased budget deficits, it will be a minimal increase.
Ahh though, you fail to understand Republicans .
They talk big but only deliver to the corporations. Its called spend like a drunken sailor (or in my experience a Pipeliner) and cut taxes.
The rank and file are quite unhappy, they do have a grievances of historical magnitude, they chose a flawed solution.
My personal take was 3 to 6 months, and we seem to be right on the timeline.
I make no claims to what happens after that, but day 200 and hunkered down in the rose garden of the Iran Hostage Crisis fame comes to mind.