CRE Insiders’ View of President Trump’s Performance Declines in June

Donald Trump

Commercial real estate pros’ views of President Trump have dipped back to negative territory, according to the latest results in NREI’s sentiment survey on his job performance.

In February, Trump’s approval numbers in the industry moved into positive territory in the wake of the passage of a massive tax bill. But sentiment has turned sour again, as it was in NREI’s two previous polls conducted in 2017.

Overall, slightly more than half of respondents to the poll (51.0 percent), which ran in late June, indicated they disapprove of the job the president has done, compared to 43.4 percent who indicated approval and 5.5 percent who felt neutral on the subject. (In February, shortly after the passage of the Tax Cuts and Jobs Act, 52.8 percent of NREI poll respondents said they approved of the president’s performance.)

Respondents’ views on the president’s handling of the economy were almost evenly split, with 45.4 percent indicating approval and 43.2 percent indicating disapproval. Another 11.4 percent felt neutral on the subject. (In February, 57.1 percent said the approved of how he was handling the economy and only 29.3 percent disapproved.)

One factor that could be driving that negativity on the economy could be that sentiment on the president’s tax cuts has softened since the last NREI poll. Overall, 47.7 percent continue to approve of the tax reform that was enacted. That was down from 57.5 percent who felt that way at the beginning of the year. Another 37.3 percent disapprove of the tax legislation (up from 29.3 percent) and 15.0 percent are neutral.

Additionally, the president’s decision to enact tariffs on some U.S. trading partners is not a popular policy with commercial real estate pros. Overall, 58.1 percent of respondents said they disapprove of the tariffs compared with just 29.6 percent who are in favor of them.

In addition, respondents also had negative views of Trump’s handling of the G7 meeting (54.6 percent disapprove vs. 35.5 percent who approve) and his immigration policies (51.0 percent disapprove vs. 41.6 percent who approve). However, 49.5 percent of respondents indicated approval of the president’s handling of the situation with North Korea, vs. 28.9 percent who disapproved of his handling of the issue.

Roughly half (50.5 percent) of commercial real estate professionals currently disapprove of the president’s overall legislative agenda. Another 41.5 percent said they approve of the overall agenda and 8.0 percent were neutral. That’s a reversal from February, when 49.7 percent said the approved, while 41.6 percent said they disapproved.

When it comes to issues on the president’s legislative agenda that pertain to the commercial real estate industry, 42.9 percent of NREI readers approve of the president, 33.3 percent feel neutral on the subject and 23.7 percent indicated disapproval. In February, 53.1 percent said they approved and only 16.9 percent said they disapproved.

Respondents feel that the administration’s biggest priority by far, when it comes to issues affecting the industry, should be the infrastructure improvement plan (60.7 percent), followed by healthcare reform (50.8 percent), immigration/border patrol (42.8 percent) and tax reform (31.6 percent).

Compared with past surveys, the numbers on all four issues declined slightly. At the same time, the number of respondents identifying sovereign debt and renegotiating trade deals as priorities rose. For sovereign debt, the number is now 30.1 percent (vs. 24.5 percent in February) and for trade deals it’s 22.5 percent (up from 15.5 percent in February.)

However, a full 63.0 percent of survey respondents feel there is still not enough information available to judge the president’s infrastructure improvement plan. Of the remaining respondents, 26.7 percent said they approve of the plan and 10.3 percent disapprove. In February, 39.6 percent said the approved.

When it comes to the plan to revamp the Dodd-Frank regulations, 39.2 percent of respondents indicated they approve of the measure, 28.6 percent disapprove and 32.3 percent said there was not enough information to make a judgement, numbers generally in line with previous surveys.

In their open-ended responses, some readers said the tax reform was great, some indicated that they need to see how the Tax Cuts & Jobs Act plays out over the longer term, and others noted that the legislation included both positive and negative aspects. “Some aspects, like opportunity zones, I think are sound policy,” one respondent wrote. “Otherwise, while the tax cuts will be of tremendous benefit to my family’s finances, I think we have enough evidence now (from Reagan, Bush W. and Kansas) that supply side economic policies only provide a short-term boost to economic growth and over the long haul can be quite damaging.” The respondent went on to say that the tax cuts were mistimed as they came during a period of economic prosperity. “The economy was already on fire and doing great, they just poured kerosene on it. Starting this year, we have seen signs of excess liquidity and over-valuation and reduced discipline everywhere we look. I’ve seen this movie before, it doesn’t have a good ending.”

Others worried lower tax revenues would siphon potential funds away from the much anticipated infrastructure improvement plan. “I do not believe that large corporations will re-invest a majority of the savings; rather, most will be paid out in bonuses and/or dividends. Small business will likely re-invest and that is beneficial. That said, lower tax revenue makes it very hard to pay for the massive infrastructure upgrade this country is in desperate need of and commercial real estate values are so dependent on. Have not seen a real plan on what will be done, when and how it will be paid for. I do worry about the unintended consequences of the tax reform, a growing deficit.”

“The money would have been better spent on infrastructure vs. giving it to corporations to be able to buy back their stock,” echoed another reader in what was a fairly frequently expressed sentiment.

While many respondents indicated the tax cuts would be beneficial to their business, they also noted that on a larger scale, it would do little to improve the fortunes of the middle class or make homeownership more affordable and came with significant risks, such as driving up the national debt to dangerously high levels.

In open-ended responses, industry insiders’ reviews of the president’s performance were decidedly mixed. Some readers thought the president has been doing “great’ and “excellent.” “My only criticism may be on tariffs, but I believe he is using them as a negotiating tool to bring about more favorable trade terms (e.g. EU tariffs on U.S. autos),” wrote one respondent. Another noted that “although [the president] sometimes says too much with only partial facts, he is addressing many issues that have been ignored and overlooked, but desperately needed. So, generally, a good performance!!!” A third wrote “Don’t like the man so much, but like most of what he is doing.”

Other commenters were less enthusiastic about the overall impact of the president’s policies.

“I’m sure there are a number of people who have benefited in the industry, but long term, it’s fairly easy to see how we fall into a recession,” wrote one. “From the tariffs that could hamper construction to immigration and the lack of people coming in to take caregiver jobs and overall add to the population with ideas and skills, the negative impacts will be felt for years to come.”

Another reader noted the president “needs to focus on ‘keeping the trains running’ instead of creating chaos and drawing attention to himself. He was handed a good economy and my fear is he will run it into the ground.”

Multiple people also expressed frustration with what they view as the president’s limited understanding of economic issues. “We expected him to be strong on business and economy, but he has demonstrated that he literally has no working knowledge of how the economy works—even basic macro 101. If one of our graduate investment analysts displayed this level of incoherence about economic policies and impacts, we would not move them forward—truly,” read one comment.

In a similar note, another respondent wrote that “for a real estate guy, he seems to have very little understanding of basic economics and if his tariffs tip us into a recession because of trade wars, that is going to be very hard on real estate.”

In all, the survey included 927 respondents, a number in line with past surveys. The August 2017 survey received 995 responses, one in October 2017 received 906 and one in February 2018 received 887 responses. The average age of respondents was 55.29 years. In all, 34.4 percent identified themselves as Republicans (down from 42.1 percent in February 2018 and 40.2 percent in October 2017). Another 20.1 percent identified as Democrats (up from 14.9 percent and 18.6 percent). And 45.5 percent said they were independents (up from 43.0 percent and 41.2 percent).

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