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Alexandra Biesada

Industry Lowdown: The Trump Effect

by Alexandra Biesada | Dun & Bradstreet Editor

December 19, 2016 | No Comments »

Boeing and Carrier aren’t alone in feeling the impact of a Trump presidency. Take a look at some of the challenges, opportunities, and trends from industry profiles updated by D&B First Research editors since the November 2016 election.

Challenge: Higher Mortgage Rates Likely with Trump in White House
A combination of factors, including the surprise election of Donald Trump to the US presidency and the expected rise in interest rates from the Federal Reserve, may lead to higher mortgage rates in 2017. Republican desire to get the government out of the mortgage market, if realized, also would likely push rates higher, according to The Christian Science Monitor. The privatization of Fannie Mae and Freddie Mac would eliminate the backing by the federal government from the mortgage market and drive up rates. The mortgage rates spiked soon after the 2016 election, with the average interest rate on 30-year fixed-rate mortgages reaching their highest level in more than a year. The average rate on a 5-year fixed/1-year adjustment period ARM, the most popular type of variable rate mortgage, also rose. While rates remain relatively low in historical terms, rising rates result in decreased demand for new mortgages and refinancings. How high will rates go in 2017? Fannie Mae’s November 2016 forecast is for 30-year rates to average 3.6% in 2017. Longer-term, however, if 10-year Treasury yields, a commonly used benchmark for mortgage-rate trends, continue to soar, rates could reach 6% within five years. The last time Treasury yields were at 6% (July 2000), 30-year mortgage rates were just above 8%.

For more insight into the Mortgage Banking industry, see our report.

Opportunity: Regulatory Revamp
The US regulatory landscape for consumer lenders may change significantly under unified Republican control of the federal government. Payday lenders — a prime target of the Consumer Financial Protection Bureau (CFPB) during the Obama administration — may get relief from a spate of rules aimed at modifying lending practices. One such rule, proposed in June 2016, is designed to prevent borrowers from falling into “debt traps” by requiring payday lenders to verify borrowers’ income and ability to repay high-interest, short-term loans in a timely manner. Other proposed restrictions include limiting the number of times borrowers can roll over their loans and requiring lenders to give borrowers written notice before trying to debit their bank accounts. While President-elect Trump hasn’t specified what he plans to do with the CFPB, his transition team said the incoming administration plans to “dismantle” Dodd-Frank, the 2010 legislation that created the agency. If a Trump appointee were to replace the current Obama-appointed CFPB director, he or she could simply choose to not finalize the rules.

For more insight into the Consumer Lending industry, see our report.

Opportunity: Political Titles Get Sales Bump from US Election
The US presidential election in November 2016 was followed by a jump in sales for books by or about Donald J. Trump. Sales of books about American politics in general also rose, according to a Publishers Weekly account of sales statistics on Amazon. On the day after the election, Bernie Sanders’ Our Revolution and Donald Trump’s Great Again: How to Fix Our Crippled America saw sales bumps of 243% and 198%, respectively. Other titles that made significant gains were Nancy Gibbs’ The Presidents Club: Inside the World’s Most Exclusive Fraternity, George Packer’s The Unwinding: An Inner History of the New America, Kelly DiPucchio’s Grace for President, and Arlie Russell Hochschild’s Strangers in Their Own Land: Anger and Mourning on the American Right. Publishers that stand to benefit from these sales include Disney Book Group (Grace for President) and Farrar, Straus and Giroux (The Unwinding). Scribner has also seen growing demand for Trump Revealed: An American Journey of Ambition, Ego, Money, and Power by Marc Fisher and Michael Kranish.

For more insight into the Book Publishers industry, see our report.

Opportunity: Trump’s Election Revives Pipeline Plans
The election of Donald Trump could spur new investments in oil and gas pipelines, a key transportation mode for petroleum wholesalers. Trump has been a vocal supporter of Keystone XL, a pipeline proposed by TransCanada that would connect the oil sands of western Canada to refineries on the US Gulf Coast. Citing environmental concerns, President Barack Obama rejected the Keystone permit application in November 2015, but some industry watchers expect TransCanada to reapply once Trump takes office. Trump has also promised to support completion of the Dakota Access Pipeline, a controversial project spearheaded by Energy Transfer Partners that would cross beneath a Missouri River reservoir, according to The Wall Street Journal. The Army Corps of Engineers denied the pipeline’s permit in December 2016 after months of protest by the Standing Rock Sioux tribe, which has opposed the pipeline’s construction on the grounds that it could contaminate the water supply.

For more insight into the Petroleum & Petroleum Products Wholesalers industry, see our report.

Trend: Energy Companies Shift Away From Coal, Despite Trump’s Election
Despite an expected boost from President-elect Trump’s commitment to reduce coal regulations, some mining companies continue to shift towards other, cheaper forms of energy. Consol Energy has shed mines in recent years to focus on production of natural gas, which has overtaken coal as the dominant US power source. Consol and other energy firms see gas as the fuel of the future, according to The Wall Street Journal. The shift away from coal is driven by changes in demand: In the US and abroad, electric utilities have retired hundreds of coal-burning power plants, while investing in more environmentally friendly and cheaper gas-fired and wind energy facilities. Many corporations have also made independent commitments to reducing carbon emissions. However, Trump administration policies are expected to reduce environmental regulatory pressure, which should breathe life into the ailing coal mining industry. Some industry executives believe that more long-term policies, such as incentives for coal power plants that use carbon capture and clean burning technologies, are needed to revitalize the industry in the long run, according to Platts.

For more insight into the Coal Mining industry, see our report.

Trend: Donations Rise After US Presidential Election
Many nonprofit organizations received an influx of individual donations in the weeks following the 2016 US presidential election, according to The Washington Post. Among those receiving the most contributions were groups with a mission of protecting civil liberties, such as the Anti-Defamation League (ADL) and the Council on American-Islamic Relations. The American Civil Liberties Union (ACLU) received more than $15 million from more than 240,000 donors from November 9 through November 30, about half of which, $7.2 million, came in the five days after the November 8 election. (By comparison, the ACLU received $27,806 in the same amount of time after the 2012 presidential election.) The ADL also received a surge in contributions, close to 90% of which came from first-time donors. Planned Parenthood, the Sierra Club, and the International Refugee Assistance Project at the Urban Justice Center also reported huge increases in donations immediately following the election.

For more insight into the Nonprofit Institutions industry, see our report.

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