One Year Later And The Trump Tax Cut Boom Seems To Be Petering Out
The data show the trend in GDP quarterly growth from the time of the initial recovery to the latest available data.
The data clearly show the lackluster nature of the recovery from the great recession after a very short-lived burst coming off the very low baseline of a near-depression, including half-recessions in 2010, 2011, and 2013. As we previously predicted, the data also show a short-lived slow-down at the end of 2017, as business managers waited for tax cuts to pass and be implemented, then a burst of economic activity as the effects of the tax cuts were felt.
But now, a year after the tax cuts, things appear to be slowing down. Not receding, but growing more slowly — probably at below long-term averages.
Well, as I’ve argued elsewhere, typically the original surge of economic growth after anticipated tax cuts finally kick in is somewhat short-lived. This was true of the JFK, Reagan, and G.W. Bush tax cuts. And it looks like it’s probably true of Trump tax cuts. In other words, some of the added activity is new growth, but some of it is simply deferred activity. So, when that deferred activity finally occurs, it booths things for a year or so, but then that’s over with. That part of the effects of tax cuts is one and done. Then things go back to normal.
As of this writing, we don’t know what the official growth rate is, but consensus is roughly 3%, a further slowdown.
Of course, that just refers to what has already happened. In addition, we have pretty much every single market-sensitive indicator pointing towards a slowdown as well. More on that at a later date.
Originally published on Townhall Finance.
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.