WEST LAFAYETTE, Ind. (WLFI) — Following the election, many were worried about the state of the economy.
But after futures dropped overnight on Tuesday, the Dow Jones opened at a new all-time high, and the S&P 500 was inches away from a new record on Thursday.
It’s no secret the stock market doesn’t do well with uncertainty, and as Donald Trump has proven time and time again – he’s anything but predictable.
Purdue economist Jerry Lynch has seen this before. Whether it’s an election, world event or anything that makes investors nervous, the market becomes unstable.
He doesn’t expect any big changes just yet.
“It will be months before Trump is installed as president. It will be months after that before any kind of action can be taken,” said Lynch.
Trump has repeatedly stated he would renegotiate trade deals. According to Lynch, renegotiating is fine. But when you tear them apart, things could get messy.
“And I know people have a difficult time accepting this, but growth in the world economy has come about through freer trade,” said Lynch. “If I had just lost my job in a manufacturing firm because of imports, I would certainly have a different view of that, and I understand that, and I sympathize with that.”
Lynch continued, “But if we get into some kind of world trade war, it is not going to be good for the U.S economy. It’s not going to be good for the world economy.
He believes more employment is going to go toward carbon-based fuels, so coal mining and fracking industries should see growth.
But what about around our region of Indiana?
“The local economy is a diversified economy. Even though Alcoa and Nanshan are producing aluminum, they are producing in different sectors,” said Lynch. “And then we have the build up of the GE plant and, of course, you always have the anchor of Purdue University. So the local economy seems to be in very good shape.”
Lynch says a lot if it comes down to how Trump handles NAFTA and the World Trade Organization.
“If you ask me: would dramatically reducing world trade impact the local economy? The answer would be, yes. Will we? I don’t know about that,” he said.
Lynch also added if OPEC and Saudi Arabia flood the market with oil, those fracking opportunities will disappear no matter who is in office.