MORE THAN SIX MONTHS AFTER ELECTION Day 2016, most of the drastic policy changes that candidate Donald Trump promised remain unfulfilled, undefined, or abandoned. Meanwhile, the course of the economy—and the implications for electrical distributors—remains much as it did before the election, albeit with a much greater range of uncertainty. The broadest measure of economic activity, known as inflation-adjusted gross domestic product or real GDP, inched up .7% at a sea- sonally adjusted annual rate in the first quarter of 2017, according to the initial estimate by the Bureau of Economic Analysis on April 28. By comparison, real GDP increased at a 2.1% rate in the final three months of 2016. Despite the sluggish first-quarter growth, there has been little change in the economic outlook over the past three months. Among the 97 economists at companies and trade associa- tions who participated in the latest quarterly survey of the National Association for Business Economists, just under two-thirds (65%) said they expect real GDP to grow between 2.1% and 3% from the first quar- ter of 2017 through the first three months of 2018. A nearly identical share of respondents (64%) in the previous survey predicted growth would be in the same range from the fourth quarter of 2016 to the end of 2017. Fourth-quarter growth of 2.1% to 3% may seem lacklus- ter, but it would actually be the strongest growth rate for the economy since the fall of 2015. Unfortunately, it may be hard to sustain even this growth rate, let alone the 3% to 4% growth that Treasury Secretary Steven Mnuchin has said will occur with enactment of President Trump’s eco- nomic program. One major impediment to achieving a higher sustained growth is the diminished rate of expansion of the labor force. For decades, the working-age population in the United States increased at roughly a 1% rate each year. Now and for the next several years, however, the number of retiring Baby Boom- ers will nearly equal the number of U.S.-born youth reaching working age. In other words, growth in the workforce will depend heavily on immigration of workers. Shifting Signals • Tax restructuring. The Trump adminis- tration presented a one-page set of proposals for tax restructuring on April 26. The tax plan could have a significant impact in either direction on demand for elec- trical distributors’ products and services—if it is enacted. On its face, it appears the plan would greatly add to the federal deficit, although administration officials assert that tax rate cuts would stimulate economic growth. If enacted, the package could encourage investment in
ELECTRICAL DISTRIBUTION CHANNEL PERCENT CHANGE VS. ONE YEAR AGO—ROLLING THREE-MONTH DOLLAR BASIS
Calculation of total out-the-door sales percent changes within a unified panel of full-line electrical distributor branches. Using same-branch
sales as an indicator, over the past six months, electrical product sales have declined by .9% over the same time period last year.
Vista Information Services sales tracking information is based on estimated sales from a representative sample of full-line electrical distributors located throughout the United States. For more
information on Vista, call 512-278-5800 or visit epicor.com/Vista-Information-Service.