US economy surging in spite of some economists’ despondency

Although the economic cycle points to a downturn in the US, growth and especially the stock market is surging.  A newborn confidence is evident and the tax reforms are augmenting investment and hence economic health. That growth in investment was already evident prior to the passage of the tax reforms.

Anecdotally, the tax reforms are said to be resulting in a new series of investment spending via the bringing back of US firms’ offshore parked savings.

In addition, Trump in Europe was feted by CEOs of so many businesses with US subsidiaries, all of whom at a dinner in Davos announced how they are massively upping their investment in US plant and R&D facilities in response to his tax cut.

America First: European CEOs Go One By One To Tell Trump They Are Investing Billions Back In The US

 

 

Could it be that the often overplayed “business confidence” is shifting growth projections out of the economic modelling straightjacket? If so this has been lost on the economics profession’s mainstream, perhaps the most extreme member of which, Nobel Prize winner Paul Krugman offered this jeremiad  on election day : “It really does now look like President Donald J. Trump. And markets are plunging. When might we expect them to recover? A first-pass answer is never.”

This entry was posted in Uncategorized. Bookmark the permalink.

20 Responses to US economy surging in spite of some economists’ despondency

  1. stackja says:

    Economists can talk. Let businessmen run businesses.

  2. Bruce in WA says:

    I was discussing this with a friend who is somewhere to the left of Karl Marx. His responses were:

    • It was started by Obama but Trump took credit for it.
    • The money is only going to Trump’s rich friends, who are systematically raping the economy. The poor have actually plunged backwards.
    • ‘Trickle-down’ is a misnomer; it’s actually ‘trickle-up’.
    • There have been no wage increases; the few pathetic ‘bonuses’ were just stage dressing and will never be repeated.

    After half-an-hour of increasingly heated discussion, I had a scotch and changed the subject. 😡

  3. Confused Old Misfit says:

    This will come as a great disappointment to some.
    There will be others to whom this news will be a blatant falsehood.
    There may even be some who think that the emotional state of any one or even a group of economists has an effect an something.

  4. Tel says:

    European CEOs Go One By One To Tell Trump They Are Investing Billions Back In The US

    Kiss up. Punch down.

  5. Confused Old Misfit says:

    European CEOs Go One By One To Tell Trump They Are Investing Billions Back In The US

    One wonders what they expect as a quid pro quo.
    Is it simply a better climate for doing business or something more substantial (above &beyond the reduced corporate taxes)?

  6. JohnA says:

    Could it have anything to do with the fact that the USD has fallen against most major currencies (counter-intuitive for now), so corporate treasuries are taking advantage of the lower cost to shift money back to the USA?

  7. JC says:

    JohnA
    #2621513, posted on January 28, 2018 at 2:45 pm

    Could it have anything to do with the fact that the USD has fallen against most major currencies (counter-intuitive for now), so corporate treasuries are taking advantage of the lower cost to shift money back to the USA?

    No, not really. The US dollar is falling for other reasons that has absolutely nothing to do with the repatriation.

    Think of it this way. Those US companies with balances overseas also have balance sheets and P/L statements based in US Dollars. It would be enormously foolhardy and immensely stupid for any US corporation with overseas earnings not to convert foreign currencies into US Dollars are soon as they are received or hedged. There’s no reason to be taking such risk. These funds (99%) are held overseas as US Dollars, so when repatriation occurs it would be a liquidity issue for overseas banks…. eg JPMrogan London would be short of funds if and when Apple move their deposit onshore. Apple may not even move the funds from JPMorgan London if their depo rates are good as the funds would recognized as having US domicile once the tax is paid/recognized.

  8. Stimpson J. Cat says:

    Economists can talk. Let businessmen run businesses.

    Liberty Quote!

  9. MPH says:

    Can anyone point me to a good article on unwinding QE in the Trump era? I’m sure he’s onto it since it is such a major threat to them but seems to be on the down low for now…

  10. amortiser says:

    Re Krugman’s prediction:

    I watched the Dow Jones futures plummet by 800 points in a couple of hours as foreign markets reacted to the likelihood of a Trump victory. This is where Krugman hopped on.

    When Wall Street opened next morning the Dow opened 200 points higher that the previous day’s close. This was a futures turnaround of 1000 points in a couple of hours which was all Krugman’s prediction lasted.

    The press still go to this clown for comments on the state of the economy.

  11. Up The Workers! says:

    Damn!

    There they go again.

    Facts and the economy are nothing more than conservative conspiracies.

    They ALWAYS conspire against and gang up on Leftists, Progressives and Socialists.

  12. Texas Jack says:

    Anyone with half a brain knows that corporate capital will trend towards jurisdictions where corporates believe they’ll obtain the highest ROIC. It’s bang for buck stupid. You don’t need to be an economist. Trump’s tax reforms, plural, adding as they do to the benefits of liberated energy markets, a skilled and sensibly priced workforce, and the US’s wariness of stultifying red-tape, are going to unlock years, plural, of GDP growth.

    Apparently the president is a narcissistic f-wit with an incurable dose of impulsiveness. An oaf. The best barometer of whether to believe all this, or not, if you must, is the S&P500. It’s melting up in a run of wins that makes Winx look ready for the knackery. It is, very simply, Trump’s rally.

  13. duncanm says:

    Could it have anything to do with the fact that the USD has fallen against most major currencies (counter-intuitive for now), so corporate treasuries are taking advantage of the lower cost to shift money back to the USA?

    no. The corporate treasuries are manically moving their money back to the US because the Trump administration has cancelled the ability for corporations to defer US taxes by leaving their money o/s.

    There is an estimated $3.1 trillion stashed out of the US.

    I think (someone correct me on this), there’s a temporary holiday allow them to repatriate funds at a discount rate of 10%. Hence applies $38M tax bill as they bring $380M back into the country.

  14. duncanm says:

    sorry — Apple is $38 BILLION in tax on their $300 B overseas cash.

    crikey.

  15. duncanm says:

    https://www.nytimes.com/2018/01/17/technology/apple-tax-bill-repatriate-cash.html

    details are:
    * previously taxed at 35% fed tax rate if brought in
    * new corporate rate is 21%
    * temporary repreive: 15.5% on cash, 8% on non-liquid assets.

    * now taxed at new corporate tax rate (21%)

  16. MichelLasouris says:

    Ex ABC today…”The largest digital currency exchanges says it is going to have to repay hundreds of millions of dollars worth of virtual money after hackers broke into its network.”
    C’mon. That was inevitable. It’s not as though they weren’t told this would happen. Dumb fucking finance ‘workers’

  17. Rob MW says:

    The left are constantly rewarding themselves with things they didn’t build and spending these rewards on debauchery held as a human right. And so it went unimpeded except for the movement that has become Trump.

  18. BorisG says:

    America First: European CEOs Go One By One To Tell Trump They Are Investing Billions Back In The US

    telling Trump what he wants to hear. Do you always take them at their word?

  19. BorisG says:

    also I am assuming that some CEOs don’t care about either Trump or Davos.

  20. Kim H says:

    Bruce in WA
    #2621477, posted on January 28, 2018 at 2:13 pm

    I was discussing this with a friend who is somewhere to the left of Karl Marx. His responses were:
    Rhetorical Nonsense
    Lets get a term Trickle Down Economics defined .
    Money earned by working industrious people that has not been taxed or over taxed by Government will ( trickle ) find its way through the economy via many peoples businesses and company`s .
    The Government eventually gets its hand on the cash after it has been through ( trickled ) the economy .
    Trickle down is just a term used by ignorant economists ( elitist Government and Media leeches ) to define money going from the rich to the poor . The standard view from these people is open tap economics were Government taxes the life out of working Industrious people and then spends it like carbon dioxide sequestered into the environment , with no benefit to anyone .
    Money will always ( Trickle ) Up or Down through an Economy its only when Government gets hold of it where the tap comes in and regulates the flow ( Regulations or over Regulations )
    At the end of the day its the people that earned the money and the slower it trickles to Government the better .

Comments are closed.