How the New Federal Economic Policies Could Lead to a Building Boom
The last eight years have not been the kindest for construction companies within the United States. The major recession that hit in 2008 had a huge impact across the entire economy, and construction interests were hit hard. Many businesses were forced to downsize, cut back on expansion plans, or shut their doors entirely, which then severely impacted construction firms. This recession came along at the tail end of nearly two decades of almost nonstop expansion in the Las Vegas area. The last couple of years have seen a slight and steady uptick in business, marking a noticeable rebound from the depths of the previous recession. However, full daylight may soon be approaching as new federal economic policies could lead to a building boom.
Tradewinds Construction is looking forward to the future with renewed optimism. The company worked tirelessly to weather the recent construction drought while still maintaining its core competencies in place. Tradewinds has been able to take advantage of the recent uptick in business by virtue of having retained the highly experienced personnel that is needed to staff and complete a wide array of projects that many other specialty contractors are unable to handle. Having a tremendous, highly skilled workforce is one thing, but there have to be projects to bid on for the company to thrive. Fortunately, the economic policies of the incoming administration appear to be poised to inject new life into the business world and create the demand for both new construction and renovation of existing structures.
Tradewinds Construction knows, and what primary economics classes used to teach, is that the health of an economy is based upon the circulation of capital. A rough example is a person forms a company, who then hires people to work for it and produce goods or services for sale in the marketplace. The company receives capital through the sale of their products, which is then used to pay employees, invest in new products, expand facilities, and hire additional people if needed. Employees gain a salary that they use to spend on many goods and services in their area, such as food, housing, transportation, and so on. Other businesses can also take part in selling products to the company or providing a service, such as administering payroll. This healthy circulation of capital provides benefits to everybody. However, this circulation can be negatively impacted by several factors, such as taxation, regulation, and trade. It is these areas that the incoming administration looks to modify in order to bolster the overall economy.
One of the pillars of the economic plan of the incoming administration is to get rid of corporate inversion, which is when a company is reincorporated abroad to reduce their tax burden within the United States. The US has the current highest corporate tax rate among the industrial nations at 35.6%, which is almost double the average rate of other nations. While mom-and-pop businesses have no recourse to the high business tax rate, major corporations do. In fact, a staggering amount of money is being held offshore by American businesses in order to avoid a massive tax bill. It’s been estimated that American companies held a massive $2.5 trillion offshore in 2015 alone, and the current tax plan ensures that such money stays offshore. The incoming administration is looking to massively reduce the tax rate down to 15%, which will have a twofold effect. The first is that it will spike business activity within the country, and the second is that businesses will be willing to bring that offshore money back into the United States.
The uneducated wonder what’s the big deal about lowering the tax rate and bringing in trillions of offshore dollars. Those active in the business world, such as Tradewinds Construction, know that companies don’t just sit on their profits like Scrooge McDuck in his Money Bin. The reality is that businesses will use that money to expand by hiring more people, building more facilities, and increasing their product lines and research. A recent example is that of Fiat/Chrysler planning on investing $1 billion in Michigan and Ohio and hiring 2000 workers. Ford cancelled a $1.6 billion manufacturing plant in Mexico and is instead expanding their operations in Michigan. This means a big upswing in commercial construction. Tradewinds Construction is highly confident that the upcoming economic boom will translate to an influx or construction projects in Nevada, especially in light of the ongoing business migration from California due to excessive taxation and regulation, not to mention a proposed spike in gasoline sales tax that will impact every phase of industry.
Trade and regulation are two other important economic factors that the incoming administration is dealing with. Every business owner knows of the odious amount of regulation and paperwork that swamp them on a daily basis. It seems that if a new facility has to be built, more time is spent on filling out the necessary paperwork and having multiple studies conducted than it actually takes to build the facility itself. Over-regulation is very costly to businesses, and major corporations have entire departments to ensure that they comply with the dizzying amount of rules and regulations. Reducing regulations has the end result of saving quite a bit of money for the business, which can then be used in more productive ways. Likewise, trade imbalances have hurt the economy, and therefore construction, as well. A number of foreign governments actively manipulate their currency in order to make it cheaper to manufacture goods in their own country and make imports more expensive. Other trade factors include countries making it difficult, or virtually impossible, for many US businesses to penetrate their market, and there has long been rampant theft of intellectual properties and proprietary manufacturing techniques by foreign countries. Still, the overall tax burden and regulations within the United States made it cheaper for American companies to move their manufacturing and other divisions abroad. The overall economic policies of the incoming administration look to alter that reality so that American companies will find it cheaper and more convenient to return to US soil.
Again, the changes proposed by the incoming administration for taxation, trade, and regulation mean one thing to businesses: substantially more money in their pockets. This should lead to a pronounced economic boom for the US, and the construction industry will be a happy recipient. In fact, the Deutsche Bank is predicting a doubling of the growth of real GDP in the US over the next two years. The increased funds held by businesses will be spent, as could be seen by the announced Fiat/Chrysler and Ford expansions. More money means more employee hires and more facilities, and Tradewinds Construction is firmly poised to take advantage of the expected economic upturn. Many corporations will look to build or expand their operations in the Las Vegas area, and Tradewinds has earned a sterling reputation for completing projects safely and on time and budget. Businesses with an eye towards Nevada know that Tradewinds Construction is one of the very few firms that have the expertise, reputation, and manpower to get the job done right that few other construction firms can match. The next few years should be busy ones due to the economic policies of the incoming administration.