😬 Trendlines: Local biz braces for Trump 2.0

👋 Welcome to Trendlines. The secret password is "Fred Lynn."

I am Boston Globe financial columnist Larry Edelman, and today I look at what's at stake for the region's economy as Donald Trump returns to the White House.

Plus: Boston thanks veterans for their courage and sacrifice. 

Trendlines is my twice-weekly newsletter for Boston Globe Media. Click the subscribe button to keep on top of business and the economy in the region and beyond.

The economy is different this time

Donald Trump is dusting off his first-term playbook — tax cuts, deregulation, sharp curbs on immigration, and steep increases to tariffs.

• It’s a strategy fraught with potential risks for the economy in Massachusetts and throughout New England.

⁉️ Why it matters

The world is a lot different than it was before the pandemic, when the economy had a good run under Trump.

• “The problem of 2016 was the sluggish economy after the Great Recession,” said Mark Melnik, director of economic and public policy research at the Donahue Institute at the University of Massachusetts Amherst. “That’s not the economy we have in 2024.”

😟 The big concern

Fueled by Trump’s tax cuts, the economy could overheat, complicating the Federal Reserve’s plan to return lending rates to more normal levels now that inflation has retreated.

• That would have sweeping ramifications for consumers and key local industries including housing, biotech and hospitals, tech startups, higher education, and tourism.

• Trump’s hard line on immigration could hinder the already tepid growth in the state’s labor force, while his climate change denialism is a harbinger of tough times for the region’s emerging clean tech sector.

👷 Labor supply

Trump's proposed deportations and tighter immigration policies could leave many employers short-handed, especially in low-wage industries such as retail, hospitality and tourism, health care and social services, and housing construction.

🚧 Tariffs

Trump's focus on tariffs threatens higher costs for consumers and businesses.

• Industries like footwear, where manufacturing is predominantly overseas, could see increased prices, hurting companies like Boston’s New Balance. Wayfair, another Boston-based company, previously faced slowing sales due to tariffs and has since shifted some suppliers outside of China to mitigate risks.

• Further tariff hikes could increase costs for sectors dependent on imported goods, such as medical equipment and pharmaceuticals.

🥼 Biotech and hospitals

Jeremy Levin, CEO of Ovid Therapeutics, expresses cautious optimism about Trump’s support of the pharmaceutical industry but worries about Trump’s consideration of vaccine skeptics like Robert F. Kennedy Jr. for key health positions. This could undermine scientific standards and impact vaccine development.

Trump has at times called for replacing the Affordable Care Act, imposing broader restrictions on abortions, and cutting the Medicaid budget. Many in the health care industry are alarmed at the prospect of further upheaval, particularly in a hospital sector already weakened by the pandemic, the bankruptcy of Steward Health Care, and several hospital closings in recent years.

🤔 Final thought 

For anxious businesses throughout New England, the wait begins.

📈 Trending

Housing: A new apartment complex with upscale amenities may seem like a marker of gentrification. But a development in Chelsea will provide new homes for some of the city’s poorest residents.

Personal finance: Many economists expect mortgage rates to fall again in the months to come, but exactly how far is murky.

Investing: Does Warren Buffett, who is sitting on a cash hoard of $325 billion, know something that we don’t?

🎖️ The Closer 

Boston honored veterans on Saturday afternoon with a parade through the city, starting at Boston Public Library in Copley Plaza and ending with a flag-raising at City Hall Plaza.

The parade included more than 500 participants from veterans’ organizations across the state. Active-duty service members, ROTC members, historical reenactors, marching bands, and other supporters also took part in the parade.

You can see more photos here.

The stock market is open today but the US government bond market is closed. Government offices and banks, which play a pivotal role in Treasury trading, observe Veterans Day. Trendlines is always working, and will be back on Thursday.