Since Donald Trump won the presidency last month, stocks have been on a tear, and among the biggest winners have been what used to be regarded as staid remnants of the old economy. Think, then, of the archetypical Dow components, companies that make things, from bridges to the cranes that build bridges to the lightbulbs that illuminate both.
Those old-world companies have been riding high at least partly on the promise that $1 trillion in spending over the next 10 years, targeting everything from domestic ports to airports, will result in significant long-term projects and boosts to top-line growth (which will filter down to the net line). Although the question remains as to just how to pay for this spending, where the incoming administration has been eyeing tax cuts and deficit spending will almost certainly mushroom, there are hints of public-private partnerships and tax credits that could at least help grease the wheels, so to speak, of these large initiatives.
One sector that could get a boost, writ large, comes in the form of U.S. electronics and technology companies, which would get a jolt in a few ways. And within smaller subset of tech, the ripple effect could be a nice one. First, there would be increased domestic clamor for everything from chips to finished items like smart meters. Demand is one thing, but keeping the competition out of the arena is another — and as has been widely reported, slapping tariffs on goods that come from overseas (and especially China), whatever one’s views on trade are, is one way to do that.
Trump has said that the money that will be put to work within the infrastructure will create a system that is “second to none,” and against that backdrop, “second to none” does not mean patching leaks and repainting and maybe fixing the garbled public address systems (you know, the ones that leave you scratching your head about whether your train is, in fact, on time or delayed).
As the new team moves through the transition phase into the Trump era, the $550 billion being earmarked for initial investment has been mentioned, as has been said in the past, to export U.S. goods and move people around the country “faster and safer.” Those two keywords, faster and safer, will ostensibly come as the U.S. will “harness technology” — which points to the internet of things. Reports before the election were already sanguine about the broader trend for IoT (not just limited to infrastructure) growing at rates as fast as 36 percent annually.
There are a few levels of investment needed here, where even infrastructure, in a way, needs infrastructure. That would include boosting cell sites for ease of communication that will come in waves thicker and faster (furiouser?) than ever before. For supply chains, that means communicating about the projects as they are built and maintained (and need repair, too). For payments, the rub would be toward faster and, of course, automated payments. Electric grids would need smarter monitoring for demand and load balance (and troubleshooting when necessary). Smart cities begin with smart foundations, and smart foundations are built on smart components. So the question remains open: Will the IoT be defined as a place where promise meets reality?