During the Great Recession that began a decade ago, the U.S. housing industry almost came to a dead halt. Where the annual volume of new housing starts had reached a high of 1.6 million in its heyday during the last decade of the 1900s, these have barely reached 600,000 annual housing starts in recent years.

Many of these had been generated during the Clinton presidency (1993-2001) in large part for those who could ill afford the required monthly mortgage payments, even though interest rates had come down somewhat.

But in the wake of the recession, lending institutions harshly strengthened their lending requirements. These rebounded upward, sharply reducing housing demand cutting almost in half the number of pre-existent housing starts. This was compounded during the two terms of George W. Bush (2001-2009), which ended as the financial crisis proceeded.

Matters became even worse as many thousands of millennials graduating from colleges and universities had no jobs awaiting them. This forced a large part of these thousands to move back in with their parents, reducing the previous 1990s demand even more.

But with the Trump Administration and its policy of recapturing manufacturing jobs, these previously dire straits have begun to appear much more appreciable for a comeback in housing starts. While the second half of 2017 featured two months close to 1 million housing starts, 2018 has a good chance to reach the million mark with regularity as the year progresses.

Much of this additional demand surge is being caused by thousands of millennials requiring an independent roof over their heads as they develop their own families.

As the year 2018 is getting off to a much more encouraging economic start than last year, it appears that the overall housing market throughout the country will deliver a substantial plus. While a more relevant federal tax structure will do its part, it’s strongly hoped that the far overdue national infrastructure upgrading will finally get underway.

The estate tax and small businesses

While the estate tax has proven increasingly unpopular as conservatives have gained increasing political power in the U.S. House and Senate, it has been negligible in adding to federal tax collections, as the U.S. debt has continued to set new records (more than $20 trillion) early in 2018.

In fact, it has reached an all-time low as a percentage of total tax collections as independent businesses have rushed to sell out as a means of assuring that the owners’ recipients give up their holdings to larger corporations, and so as not to be saddled as potential tax victims.

This trend was sped up during the outbreak of leveraged buyouts (LBOs) in the 1980s and the subsequent Great Recession, as privately owned businesses feared a repeat of the financial crisis. Added to that was the monetary power of conglomerates that went after manufacturers, distributors and end users in the Plumbing-Heating-Cooling and Piping sector, for instance.

This has led to a massive conglomerate sector tending to move its manufacturing capabilities to the cheapest cost areas, whose quality passed muster in the minimum American standard levels.

This has currently led to the Trump Administration’s strong efforts to eliminate the estate tax by dwelling on the all-time high consumption percentage (68%) as a component of the country’s world-leading gross domestic product.

The year 2018 may well become the period to determine whether the independent businesses will retract their direction and make it again desirable to keep ownership within the family. The current year is particularly significant as the November midterm elections will either strengthen or weaken the Trump Administration’s influence.

A continued digression of ownership by conglomerates at all levels of manufacturing, distribution and/or end use may well lay the groundwork for PHCP and similar businesses in the future.

A further shift to conglomeration will most assuredly transfer most American business sectors away from private ownership, making the value of dividends and their quarterly reporting results the ultimate judgment value. This will determine whether personal or family ownership will be the ultimate structure of most businesses in the future.

Interest rates slow to climb

According to early signs emanating from incoming Federal Reserve Chairman Jerome Powell, his approach will be even more business-friendly than his predecessor Janet Yellen, a Democrat appointed by former President Obama.

While indicating his commitment to gradually raising interest rates, he will likely reflect his predecessor’s conservative policies. In preliminary hearings, Powell expressed commitment to legislation that would roll back some of the sweeping banking regulations enacted in the aftermath of the Great Recession.

While sensitive to the Federal fund rates’ impact on President Trump’s stated economic improvement goals, Powell was also well aware of the huge $4 trillion dollar debt, which had more than tripled from $1 trillion over the past eight years. This was done to reduce the huge surplus of worthless and far overpriced mortgage derivatives that had been clogging the arteries of the U.S. banking system.

Citing an annual inflation rate still below the Fed’s 2% target, Powell indicated little need to bump rates up ahead of the moderate inflation rate existing by the end of 2017. Powell has also backed a Senate bill that would relieve large regional banks of heightened interest rates at their own risk. This would allow banks with less than $10 billion in assets to make potentially risky trades with indigenous investments. When challenged on this and other controversial banking decisions during Senate hearings, Powell indicated a need for lessening of interference in banking decisions by government legislators who might not have the background and knowhow to understand critical banking policies.

The incoming chairman has also made it quite clear that he strongly supported the Federal Reserve’s independence from the White House and Congress and has voiced opposition to prospective audits of the Fed’s mortgage policy decisions, on a regular basis.

Robots vs. workers

While vastly improved employment numbers and expanded factory jobs are key priorities in President Trump’s reversal of current dependence on global imports, the surge of robotics in manufacturing may further complicate his objectives.

In the first quarter of 2017, North American manufacturers spent $516 million on industrial robots, a 32% jump from a similar quarter a year ago, according to a study published by the Brookings Institute. The study indicated that many of these are ending up in steel and auto manufacturing centers.

According to the report, there are about nine industrial robots replacing 1,000 workers in Toledo and Detroit automotive plants — three times the figure for 2010. Many of these robots are used to help assemble electric cars, developing their heavy chassis, assembling their batteries and more.

Robots are also plentiful in Amazon’s massive warehousing and shipping facilities. But such orders generated in the U.S. are dwarfed by those from China, which amount to some 90,000 units — almost a third of the world’s total industrial robot orders in the past year. The International Federation of Robotics estimates that by 2019, China’s annual industrial robot orders will rise to 170,000 units.

Promising hands-on job opportunities while the world increases its dependence on robots instead of blue-collar workers may severely impact the Trump Administration’s emphatic industrial job creation plans. This coming year will determine whether this seemingly contradictory employment attempt will be severely hamstrung as the U.S. industrialization makes further efforts to move forward.