Mike Ginsberg, president & CEO of Kaulkin Ginberg Company, hosted a webinar on the present state of affairs in the accounts receivable management (ARM) industry. Among the topics discussed included the political climate.
Throughout his campaign and the early parts of his presidency, Donald Trump pledged massive economic growth, market deregulation, and significant tax reform, among other ambitious promises. In turn, soon after his November 2016 victory until January 2019, consumer confidence spiked and remained high relative to the prior decade since the Great Recession. Throughout the first half of his first term, President Trump somewhat succeeded, as he oversaw moderate economic growth, mild market deregulation through federal legislation, and passed a heavily partisan tax reform bill: the Tax Cuts and Jobs Act (TCJA). However, with these aforementioned accomplishments came significant uncertainty due to market leaders’ and small business owners’ inability to effectively react to President Trump’s claims and actions. Several executives in the accounts receivable management (ARM) industry pointed to this uncertainty as presenting major issues to their business operations, especially as it relates to a possible response by politicians with less favorable views of the industry, such as the prospects of Elizabeth Warren or Bernie Sanders presidential victories in 2020.
Additionally, following the 2018 midterm elections, which saw Democrats gain a strong majority in the House of Representatives in addition to winning several governorships and state elections (illustrated in Figure 1), many ARM executives are anticipating heavier scrutiny by Democrat-leaning state governments and attorneys general on implementing stricter regulations and punishing non-compliance. We already saw this through the passing of the California Consumer Privacy Act (CCPA), its version of the European Union’s General Data Protection Regulation (GDPR). As these occurrences become more rampant, the ARM industry may begin seeing more significant compliance costs and strategic changes based on regionalization and regulatory restrictions.
Figure 1

Furthermore, the recent government shutdown, spanning from the end of December throughout most of January, drove a significant decline in consumer optimism – the first occurrence during the Trump presidency. Arguably the most positive economic impact that President Trump has had was the strong optimism he infused with the economy and markets. Figure 2 below shows the massive spike in consumer sentiment immediately after his presidential victory. With strong consumer sentiment and market optimism, it is implied that there would be increased spending and consumption throughout the economy, which significantly benefits the ARM industry. However, the January 2019 data suggests that consumer may have hit a breaking point with the continued uncertainty, which may start a domino effect leading to sub-optimal economic activity. “Due to the tiresome and sometimes endless trade wars, the recent Government shutdown, and falling investor confidence (via stock market),” states Mike Ginsberg, “consumer confidence dropped 7.7% this month, falling to its lowest levels by far under the Trump administration.”
Figure 2


The current political environment provides both positives and negatives for the ARM industry. Market deregulation, lesser regulatory scrutiny, and business-favoring tax reform all proved to be positive indicators for the ARM industry. However, the growing uncertainty among business leaders and consumers derived from the Trump administration’s inconsistencies and turnover, in addition to the fears of a stricter regulatory environment from a more progressive Democrat candidate in 2020, has led to issues and worries for ARM leaders.
If consumer optimism rebounds from the January 2019 drop, then the ARM industry should anticipate an increased likelihood of consumer debt accumulation and a greater ability for them to repay existing balances. However, things could turn south quite quickly for consumers if they return to their pre-Great Recession overly aggressive borrowing and spending propensities, further buoying ARM industry growth or leading to market-wide contractions.
For more information on the present state of affairs in the ARM industry and the impact these and other significant changes and events will have on service providers, tech companies, debt buyers, and credit grantors, reach out to us for a copy of the webinar.