$1 TRILLION WEALTH MANAGER: Invest in America now
REUTERS/Joshua RobertsU.S. President Donald Trump speaks during a meeting with Chief Executive Officer of Intel Brian Krzanich in the Oval Office of the White House in Washington, U.S., February 8, 2017.Before taking office last month, President Trump said that his administration will follow the rule of "buy American and hire American." To make success more likely, we must add "invest American."
While anticipated reforms to spur growth can be complex and take time, today we have an immediate opportunity to grow the economy, driven by rising optimism and a willingness among investors and small businesses to put their cash to work.
Let's build on those sentiments and provide reasons to invest in America through incentives, by removing structural impediments, and by focusing on areas that have both the most need and the most interest from investors.
In the United States, UBS manages more than $1 trillion of our clients' assets. We speak to investors daily and frequently gauge their feelings about the U.S. economy and prospects for growth. According to our most recent Investor Watch survey of high net worth and ultra-high net worth individuals*, their optimism about the U.S. economy has increased dramatically since the presidential election.
A majority of these investors are actively looking for opportunities in the market, with 42% looking to add to their equity portfolios. Meanwhile, our survey of business owners revealed that they are twice as likely to increase investment and hiring in their businesses than to scale back. When you consider these sentiments, along with widely held expectations globally for continued U.S. economic outperformance, the signs of demand for growth are encouraging.
REUTERS/Christian HartmannTom Naratil, President Wealth Management Americas and President Americas, UBSLet's be clear that both investors and business owners we spoke with still have a number of concerns. Individual investors continue to express apprehension over the political environment in Washington. Small business owners are chiefly worried about employee healthcare costs, taxes, and regulations.
Yet despite those issues, and after an extended period of uncertainty, both groups overwhelmingly indicate that they are ready to get off the sidelines and begin making the kind of decisions that will positively impact the economy. Business and political leaders should be doing everything we can to listen and respond.
The challenge, in this polarized political climate, is deciding how to make the most of this momentum. Today, there is a great deal of effort and political capital being spent on pushing more complex policy changes that will take time, such as overhauling the politically-sensitive Affordable Care Act or wholesale tax code reform. Instead, why not pursue "quick wins" on issues where there is more likely to be common ground across the political spectrum?
Doing so will make a strong case for investing in the U.S. economy right now, while also building the institutional, bipartisan muscle memory that is necessary to address the long pole items like improving ACA.
Investors and business owners suggest two specific areas where policymakers can break the persistent legislative gridlock and make meaningful progress.
Reuters/Jonathan DrakeResidents inspect a washed-out section of collapsed road after Hurricane Matthew hit the state, in Fayetteville, North Carolina.The first is the continued enthusiasm for infrastructure investment. The American Society of Civil Engineers sees a $1.4 trillion funding gap by 2025 to improve key infrastructure, with mass transit facing the largest shortfall. Encouragingly, there is bipartisan consensus that infrastructure investment-particularly when leveraging private capital-is one of the single best ways to put people to work and to grow the economy.
The federal government has a powerful opportunity to shape incremental tax policy that creates incentives for investors to take on more risk from these projects, encouraging private capital to amplify the effect of its own spending.
The second area is scientific and medical research. Despite the skyrocketing cost of healthcare, the U.S. share of global medical research funding has declined by nearly 25% since 2004, according to the American Medical Association. Investors see this as an opportunity with economic upside and clear societal benefits through research that unlocks new cures and treatments for diseases and chronic ailments. Here again, tax policy can help drive investment in early-stage commercial research projects that would help satisfy investor appetites while addressing a vital need.
These are just two areas where investors tell us that they see opportunity, and which also provide a boost to the economy and more broadly felt benefits. In the coming months, we will surely see a number of bruising legislative battles waged. But if lawmakers can prioritize policies that can be passed in short order, the wider economy will feel the effects much sooner and with the potential for greater long-term growth. Investors are eager to deploy their capital, and the federal government should recognize its role in making that possible. America will be stronger as a result.
Tom Naratil is President Wealth Management Americas and President Americas, UBS. UBS Wealth Management Americas had $1.1 trillion in client assets at the end of the fourth quarter.
* Survey conducted December 20 - 27, 2016, among 2,025 high net worth investors and an oversample of 282 business owners who have at least one employee besides themselves.