Where is all the business investment we were promised???

transporter

Well-Known Member
On point commentary:

The Trump tax cuts were supposed to set off an investment boom. They aren’t so far

If you put all this together, then, you get a picture of an economy that’s growing around 3 percent right now because of all the short-term stimulus it’s getting, but will soon go back to the 2 to 2.5 percent it was before because that stimulus isn’t changing companies' long-term behavior like the Trump administration thought it would. They were convinced, you see, that cutting the corporate income tax would make investing here so attractive that money would come pouring in from overseas. That would then fund the investments we needed to increase growth today, and the fruits of it — higher productivity — would increase growth tomorrow as well.

Except, well, it’s not. The problem is that while the tax-cutting story the Trump administration was telling might be true for a small, open economy like, say, Bermuda’s, it was never going to be for a large and slightly closed one like our own. So it shouldn’t be a surprise that we’re seeing perhaps a modest increase in investment, but not the bonanza we were promised.

The big picture, though, is how little Trump has done to change our long-term economic outlook. His tax cut certainly seems to have juiced growth this past year, but, since it wasn’t paid for, it’s also made the Federal Reserve raise rates enough more that its net effect should be pretty close to zero by the end of the next year or so. Unless, of course, companies do start investing far, far more than they are right now.
 
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