The election of Donald Trump has generated lots of startling statistics. Here is another: Ray Dalio, head of the Bridgewater hedge fund, crunched the biographies of the incoming administration and found that the top eight officials have a total of just 55 years of government experience, much of which was in the military.
That is paltry compared to the past eight presidents. Barack Obama’s top team (president, vice-president, chief of staff, attorney-general, and secretaries of state, commerce, defence and treasury) had 117 years of collective experience; for the presidencies of George W Bush, Bill Clinton and George HW Bush, it was 80, 101 and 79 respectively.
Mr Trump’s top team has, however, spent a collective 83 years’ in business. Mr Obama’s administration had just five - yes, five - years.
So the defining feature of Team Trump is not simply that many are ultra rich; it is that they are C-suite hardened. The junior appointments now being made reinforce that pattern. This week, for example, Mr Trump put the Securities and Exchange Commission in the hands of Jay Clayton, a private sector lawyer who has never worked in government.
Is this good for American business? One might suggest that some of Mr Trump’s appointments say more about his style than policy substance, in that he prefers to pick people of a similar bent to him, namely government outsiders who hate bureaucratic processes, and stress tangible results.
This could be energising. But it is not clear if a team of “doers” will have a coordinating ideology, let alone the diplomatic skills needed to get anything done with Congress. It is also alarming that the appointment of this C-suite team has not stopped Mr Trump’s populist anti-business potshots.
This week General Motors was in the crosshairs of Mr Trump’s Twitter feed (for producing cars in Mexico). Previously it was Ford (which has just cancelled an investment in Mexico because of the pressure). Boeing, Apple and Carrier have been targeted too, and others will follow. This is not the normal behaviour of a business-friendly president.
But business psychology - like Washington politics - can be perverse. And what is striking is that every executive I have spoken to recently is determinedly upbeat. “The thing that has impressed me in recent weeks is the change in the animal spirits among business, small and large,” David Cote, chairman and chief executive of Honeywell, told me this week. “There is no doubt about it - a sense of optimism is there.” That is partly due to Mr Trump’s policy proposals, which feature pro-business measures such as tax reforms, deregulation and investment incentives. But the other factor is Mr Dalio’s data point - those 83 years of C-suite experience.
While nobody knows whether Mr Trump will actually get anything done (nor whether the Federal Reserve will respond to tax cuts by raising rates), business leaders can see the symbolic shift represented by those cabinet picks.
And while nobody can create economic growth with mere symbolism, symbols can have a powerful psychological impact. “We are about to experience a profound, president-led ideological shift,” Mr Dalio argues. “This could have a much bigger impact on the US economy than one would calculate on the basis of changes in tax and spending policies alone, because it could ignite animal spirits.”
As Jeff Immelt, CEO of General Electric recently observed: “You just hear a lot more optimism: people thinking about [investment] projects that we weren’t thinking about before. The sense that we might modernise our tax code...gets people thinking in a different way.”
Such optimism might be misplaced. But it cannot be ignored. The key point for investors is to watch what Mr Trump’s C-suite team actually does on the policy front in the coming months - and also to watch what companies such as GE do with their investment plans.
That is not just because of Mr Trump’s populist tweets. In economic terms bullying Ford into keeping one car plant in America is almost irrelevant. But if American companies are getting ready to unleash more investment, as Mr Immelt says, this could be truly significant; particularly given that capital expenditure has been so disappointingly weak in recent years.
All eyes, then, on the next set of capex statistics; and on the corporate plans that the real C-suite executives will release when they issue their earnings later this month - just as Mr Trump’s C-suite cabinet is being sworn in.
