President Donald Trump said tax cuts would be the “rocket fuel our economy needs to soar higher than ever before.” A little over one year after the Tax Cuts and Jobs Act was signed into law, that expectation hasn’t panned out, a new Bank of America Merrill Lynch analysis has found. One reason for this is growth expectations are a bigger driver of capital expenditures than the actual cost of capital – which tax cuts theoretically lowered. The analysis of the disconnect between what Republican lawmakers expected and what has transpired comes amid the longest government shutdown on record and calls for slowing growth. “The investment boom that wasn’t.” That’s how Bank of America Merrill Lynch economists categorized what’s happened in the US economy since the Tax Cuts and Jobs Act was passed a little over a year ago. What was theoretically supposed to be a boon for US companies – and by extension, the broader economy … [Read more...] about Trump said tax cuts would be ‘rocket fuel’ for the US economy. Here’s why they weren’t.
The government shutdown has entered into its fourth week. According to economists, the shutdown will take a bite out of the US economy. JPMorgan CEO Jamie Dimon warned on Tuesday that the shutdown will hurt the US economy, citing research that showed it could even push GDP to zero. “Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon said. JPMorgan Chase CEO Jamie Dimon on Tuesday sounded the alarm about the damage caused by the federal government shutdown. During the bank’s quarterly call with media on Tuesday, Dimon warned that the partial government shutdown, which has left 800,000 federal workers without pay, would weigh on the US economy. “Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon told reporters. Pantheon Macroeconomics chief economist Ian Shepherdson wrote in a note to clients on Monday that US GDP could go negative if the shutdown extends … [Read more...] about Jamie Dimon warns that the government shutdown could take a massive bite out of the US economy
Most economists agree that the government shutdown will weigh on US economic growth. But according to one economist, if President Donald Trump follows through on his threat to keep the government closed for “months,” the hit could be severe. Pantheon Macroeconomics’ Ian Shepherdson says if the shutdown lasts through March, then first quarter US GDP could be negative. While the prediction is a worst-case scenario, it highlights the dangers of a long-term shutdown. While the now record-breaking government shutdown is causing serious upheaval on Capitol Hill, economists say that the closure of large portions of the government is already weighing on the US economy. But it could get even worse. According to one economist, if the shutdown lasts for “months” – as President Donald Trump threatened in a meeting with Democrats – the US economy could actually shrink in the first quarter of the year. Ian Shepherdson, chief economist at Pantheon … [Read more...] about The government shutdown could cause a disaster for the US economy if Trump follows through on his threat to continue the fight for ‘months’
The US government has been in partial shutdown since December 22. Key US economic data will either be delayed or be distorted by the shutdown the longer it lasts, creating uncertainty over what is actually happening in the economy. BAML’s US economics team estimates that for every week the shutdown lasts it will reduce GDP growth by 0.1-0.2 percentage points. The US government has been in partial shutdown since December 22 as Republicans and Democrats quarrel over funding for Trump’s southern border wall. To date, there are few signs the deadlock will end anytime soon, putting the shutdown on track to become the longest on record, should it move beyond January 12. As Bank of America Merrill Lynch’s (BAML) US economics team note, not only does the shutdown pose a risk of slowing the economy down the longer it runs, but it will also create increased uncertainty over what exactly is going on within the economy. Here’s a snippet from the bank explaining why: … [Read more...] about BAML explains why uncertainty in the US economy will increase the longer the government remains shutdown
WASHINGTON -- Federal Reserve Chairman Jerome Powell said on Thursday the US central bank has the ability to be patient on policy given inflation is stable, allowing it to assess whether the US economy will slow this year as some in financial markets worry. While those initial comments boosted stocks, they later slipped when Powell said the Fed would shed significantly more assets than it already has. The reaction by investors underscores the delicate balance Powell must maintain as he continues to see strong economic momentum at home even as investors fret over a slowdown overseas. "Especially with inflation low and under control, we have the ability to be patient and watch patiently and carefully as we ... figure out which of these two narratives is going to be the story of 2019," he said at the Economic Club of Washington. He also downplayed December predictions from Fed policymakers showing that, at the median, interest rates would be raised twice this year. "There is no such … [Read more...] about Powell: Fed can be patient as US economy evolves in 2019