From the beginning, President Donald Trump’s economic policies have intended to put “America first.” Since the ultimate goal of such policies is to strengthen America’s economic growth, solve for domestic issues and make the nation more secure, it’s worth a review of how well policy changes are working toward those goals.
According to the World Economic Forum’s 2017-18 Global Competitiveness Report, the United States moved up one spot this year to No. 2, surpassing Singapore. The perennial No. 1 ranking still belongs to Switzerland. While the U.S. has made great strides over the last year, it still lags behind many other developed countries in such areas as health and primary education. The nation tends to outperform in areas of business sophistication and innovation.1
Thanks to 2016 legislation that reduced the corporate tax rate from 35 percent to 21 percent, the U.S. jumped four spots to No. 24 this year, according to the Tax Foundation’s 2018 International Tax Competitiveness Index. The top three spots are currently held by Estonia, Latvia and New Zealand.2
These rankings show that the economic stance of countries can change based on who holds public office, the cultural direction of national policies and general/cyclical global market characteristics. In other words, we’re not in control of many factors that affect how much we earn, how much we pay in taxes, how well our investments perform and the general economic health of our country and local communities.
While it’s important to stay abreast of these factors, we believe that the most significant contributor to personal financial success is devising a financial strategy based on your own goals and situation. Equally important is monitoring that strategy to ensure it continues to reflect your personal circumstances, as well as any external impact by political or economic changes. This is all part of the services we provide clients — helping you stay on track to meet your goals.
Potential side effects from America’s more isolationist stance are diminishing global influence and strained relationships with nations who feel their interests have been spurned. The U.S. dollar has enjoyed dominance as the world’s preeminent currency, and the Trump administration is presently using sanctions against Iran to pressure other nations, threatening to punish those who continue to do business with Iran. However, global players such as the European Union have expressed ire at the U.S. dictating those with which it can trade, to the point of openly considering potential workarounds to avoid penalties.3
As much as the United States focuses on its own economic strength, these efforts have little impact on how quickly other countries are growing. Though the U.S. continues to exude strong economic growth, it has been losing ground in the share of global gross domestic product (adjusted for purchasing power parity); a trend projected to continue through 2022.4
1 World Economic Forum. 2017. “The Global Competitiveness Report 2017–2018.” Pages 302-303. http://www3.weforum.org/docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017–2018.pdf. Accessed Nov. 30, 2018.
2 Daniel Bunn, Kyle Pomerleau and Scott A. Hodge. Tax Foundation. Oct. 23, 2018. “2018 International Tax Competitiveness Index.” https://taxfoundation.org/publications/international-tax-competitiveness-index/. Accessed Nov. 30, 2018.
3 Peter Coy. Bloomberg. Oct. 3, 2018. “The Tyranny of the U.S. Dollar.” https://www.bloomberg.com/news/articles/2018-10-03/the-tyranny-of-the-u-s-dollar. Accessed Nov. 30, 2018.
4 Statista. 2018. “United States’ share of global gross domestic product (GDP) adjusted for purchasing power parity (PPP) from 2012 to 2022.” https://www.statista.com/statistics/270267/united-states-share-of-global-gross-domestic-product-gdp/. Accessed Nov. 30, 2018.