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.
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.”