Tax Cut Working Better Than Advertised The latest GDP estimate shows higher business investment.
https://www.wsj.com/articles/tax-cut-working-better-than-advertised-1543446448
Despite concerns over trade disputes and a slowing global economy, the corporate tax rate cut enacted in December of 2017 continues to encourage the business investment that leads to higher productivity and higher wages for American workers. Today the government reported that such investment was higher than it initially reported for the third quarter of the year.
Last month your humble correspondent noted:
The country has lately been so prosperous that we’ve had the luxury of being disappointed in some of the underlying data in Friday’s report of robust 3.5% economic growth for the third quarter. This column was as disappointed as anyone that business investment didn’t show another sharp increase after the stellar numbers posted in previous quarters.
But the overall growth reported by the Commerce Department’s Bureau of Economic Analysis was strong. And former Bush economist Larry Lindsey’s consulting firm Lindsey Group argues in a recent note to clients that it’s bound to look even stronger as the data becomes more refined…
In that note Mr. Lindsay told his clients that it “seems quite reasonable that there will be an upward revision in equipment investment (and possibly other investment as well) in the post-election report for the third quarter.”
This column observed “it is extremely reasonable to assume that America’s new competitive corporate tax system will continue to attract investment to the United States.”
That assumption looks even better today, now that the Commerce Department has reported that non-residential fixed investment rose 2.5% at an annual rate in the three months ending in September, up from 0.8% in the earlier estimate. Within this overall category of business investment, spending on equipment was revised to estimated growth of 3.5%, up sharply from an earlier 0.4% estimate.
As for the overall economy, it is on track to hit the White House target of 3% growth for the year. And Mr. Lindsey sees more of the same on the horizon, telling this column via email, “My guess is high twos for fourth quarter and an average of 3 for 2019.”
Get ready for more speeches featuring America’s 44th President asserting ownership of the growth breakout that never managed to arrive during his eight years in the White House. Today Jack Crowe at National Review writes:
Former President Barack Obama claimed credit Tuesday for the recent boom in U.S. oil production immediately after praising the Paris Climate Accords, which committed the U.S. to dramatically reducing greenhouse-gas emissions.
“I was extraordinarily proud of the Paris accords because — you know, I know we’re in oil country and we need American energy, and by the way, American energy production,” Obama told the audience gathered at Rice University’s Baker Institute on Tuesday night. “You wouldn’t always know it but it went up every year I was president. That whole, suddenly America’s like the biggest oil producer and the biggest gas — that was me, people.”
While U.S. oil production surged by nearly 100 percent over the course of Obama’s two-term presidency, the vast majority of that oil was extracted from state and private lands as the Obama administration took steps to curtail oil production on federal lands.
This column thinks that America’s prosperity revival has room to run, but prudent investors should always be on the lookout for the end of the Trump bump. We’ll know it’s really over when the former President stops pretending it’s his economy. CONTINUE AT SITE
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