CORPORATE PROFITSADJUSTED FOR INFLATION, 2012 DOLLARS
Q1, 2017
Q1, 2018
Q2, 2019
$1.562 TRILLION
PROFIT CHANGE IN PROFIT, ANNUALIZED
$1.687 TRILLION
$1.656 TRILLION
8.0%
–1.5%
NOTE: CORPORATE PROFITS AFTER TAX WITH INVENTORY VALUATION ADJUSTMENT (IVA)
AND CAPITAL CONSUMPTION ADJUSTMENT; SOURCE: BUREAU OF ECONOMIC ANALYSIS
68
FORTUNE.COM // DECEMBER 2019
steepest decline in foreign applications among
all countries, says the Graduate Management
Admission Council. In contrast, foreign ap-
plicants to business schools in Canada and Eu-
rope increased. The drop in the U.S. “is related
to students’ concern about how long they’ll be
allowed to stay after graduation,” says Matthew
Slaughter, who served on George W. Bush’s
Council of Economic Advisers and is now dean
of Dartmouth’s Tuck School of Business. “The
visa law hasn’t changed, but the administra-
tion of it has. Through social media, students
worldwide know about it. There’s a percep-
tion of, Am I welcome here?” That’s a prob-
lem because immigrants are essential to new
business creation, the foundation of economic
growth. Nearly half of all Fortune 500 compa-
nies were founded by immigrants to the U.S.
or their children, says the Center for American
Entrepreneurship, a nonpartisan policy group.
More than half (55%) of startups worth at least
$1 billion have at least one immigrant founder,
according to the National Foundation for
American Policy, a nonpartisan research group.
uncertainty
DONALD TRUMP PRIDES himself on being unpre-
dictable. He has said for years that it’s a key
element of his negotiating strategy, and he
wrote in his book Crippled America, “I don’t
want people to know exactly what I’m do-
ing—or thinking. I like being unpredictable.
It keeps them off balance.” He brought that
style to the White House, abruptly reversing
positions on such weighty matters as NATO
(it’s obsolete; no, it isn’t), China (it’s a cur-
rency manipulator; no, it isn’t), the Export-
Import Bank (it’s useless; no, it’s a good
thing), cutting payroll taxes (considering it;
wouldn’t dream of it), and many more. But
the President is more than a negotiator. He
is also, among other things, America’s chief
policymaker, and in that role unpredictability
can be seen as unreliability or untrustworthi-
ness. He has dramatically increased the un-
certainty surrounding U.S. policy on multiple
issues, and considerable evidence shows that
it’s significantly harming the economy and business.
Policy uncertainty has actually been measured going back to 1985
by economists at Northwestern University, Stanford University, and
the University of Chicago, who created a widely used monthly policy
uncertainty index based on computer analysis of news articles. In
the Trump administration, economic policy uncertainty has spiked
to levels not previously seen except in crises—9/11, the financial cri-
sis, the 2013 government shutdown. Uncertainty on trade policy in
particular is at levels seen only once before, during the negotiation
and ratification of NAFTA—except that back then the uncertainty
quickly passed, while this time it has remained elevated for months.
There has been “a tremendous upsurge in anxiety and uncertainty
about trade policy and its economic fallout,” write the Univer-
sity of Chicago’s Davis, Scott R. Baker, and Nicholas Bloom, who
together created the index. They also measure uncertainty in Japan
and China, where results are similar. Their conclusion: “President
Trump’s protectionist policies, threats, and bellicose rhetoric have
brought about an extraordinary rise in trade policy uncertainty
inside and outside the United States.”
APR. 1985=100
2015 2016 2017 2018 2019
SOURCE: ECONOMIC POLICY UNCERTAINTY
0
200
400
600
U.S. TRADE POLICY UNCERTAINTY INDEX
JULY 2019
199.4
WHY TRUMP IS BAD FOR BUSINESS
Earnings Surprise
In Trump’s first year in office, corporate earnings
soared 8%. Since then, profits have been elusive.
