Onshore Energy Conference — Dubai Onshore Energy Conference — Dubai 02 | Page 41

THE pH REPORT
TRUMP’S POLICIES CANNOT
DELIVER ON HIS PROMISES
W
all Street’s post-election
rally suggests that many
investors currently have
the wrong idea about
Donald Trump. They have decided he is
a new Ronald Reagan, with policies that
will deliver a major bull market. But those
promoting this narrative have forgotten
their history. Both men certainly share
a link with the entertainment industry.
But Reagan was a West Coast Governor
before he became President, and took
office towards the end of one of the worst
recessions in the 20th Century.
By contrast, Trump is an East Coast
property tycoon and takes office at the
end of an 8-year bull market.
Critically, the demographic background
to their Presidency couldn’t be more
different. For Reagan, it really was
“Morning in America”, with the vast
US BabyBoomer cohort (born between
1946-64) coming into their peak wealth
creation years. But since then, the US has
seen dramatic change in the underlying
make-up of its US population. As chart
1 illustrates, this is not apparent in the
bare averages (grey circle), which show
median age rising from 29 to 37 years over
the period, and median household income
rising from $47k to $54k ($2016).

▼ Chart 1
The US population
is now effectively
composed of two
quite distinct
cohorts in terms
of its economic
potential
US POPULATION BY RACE % ,
MEDIAN AGE, HOUSEHOLD INCOME
1980 and 2016, $2016
50
45
BLACK, HISPANIC POPULATION
WHITE, ASIAN POPULATION
US AVERAGE
40
30
25
2016
2016
31%
35
1980
1980
18%
2016
69%
1980
81%
20
30,000
35,000
40,000
45,000
50,000
These averages hide the fact that the US
has essentially become two nations over
the period in terms of its demographic
make-up, and hence its economic potential:
In 1980, Whites/Asians (blue) were 81% of
the population. They had a median age
of 31 and median household income of
$50k. Blacks/Hispanics (green) were just
18% of the population, with median age
of 23 and income of $33k
In 2016, Whites/Asian were just 69% of
the population, whilst Blacks/Hispanics
had risen to 31%. The White/Asian
profile was similar to that of Western
Europe, with a median age of 42 and
incomes of $60k. By contrast, however,
the Black/Hispanic cohort had a median
age of just 30 and an income of only
$40k income
In turn, these developments highlight
two underlying issues which spurred
President Trump’s path to the White
House, and are key to future economic
performance during his Presidency. One
issue is that over 90% of population growth
since 2000 has occurred in the poorer
racial and ethnic minority communities. It
will be very hard to significantly increase
their spending power in the short-term as
this will require long-term solutions to be
put in place, such as education to create
job opportunities.
55,000
ANNUAL HOUSEHOLD INCOME, $2016
60,000
65,000

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