"I don't think I'm going to have to travel too much to sell it. I think it's selling itself. It's becoming very popular," Trump said.Yeah, I don't quite think that happened, Drumpf. The Republicans were running away from their support of the Tax Scam by September because the public wasn't buying it, and they lost the House of Representatives and numerous state offices this November.
But maybe it was just a "messaging problem", and this is actually working out. Let's go to the numbers, shall we?
On the macroeconomic level, there is a bit of evidence that the Tax Scam bumped up activity in the short term, although incomes weren’t helped much.
Personal Income change, last 12 months
Nov 2017 +4.62%
May 2018 +4.32%
Nov 2018 +4.57%
Average Hourly Wage change, last 12 months
Nov 2017 +2.5%
May 2018 +2.8%
Nov 2018 +3.1%
Employment change, last 12 months
Nov 2017 +2.193 million
May 2018 +2.424 million
Nov 2018 +2.443 million
Personal consumption expenditures, last 12 months
Nov 2017 +4.76%
May 2018 +4.92%
Nov 2018 +5.46%
The Tax Scam also inflated earnings by corporations, due to the lower corporate tax rates. Much of those extra earnings were used to buy back more than $1 trillion in stock this year, which you’d think would pump the market even higher.
In the first 3 months, the first post-tax cut Bubble in the stock market burst, dropping stocks in the short term. It seemed like a blip though, as the stock market recovered over the next 6 months as the stimulative provisions in the Tax Scam took hold.
DOW Jones Industrial Average
Dec 22, 2017 24,754.06
March 22, 2018 23,957.89
June 22, 2018 24,580.89
Sept 21, 2018 26,743.50
But the last 3 months has taken all of that stock buyback and profit Bubble back and then some.
Sept 21, 2018 26,743.50
Dec 22, 2018 22,445.37 (-16.1% last 3 months, -9.3% last 12 months)
And the DOW covers the largest companies. It’s noticeably worse when you look at the wider Russell 2000 index, which captures small-cap stocks. The Russell Index ran up sooner than the DOW, had its Bubble burst sooner, and has fallen farther, all the way into Bear Market territory.
Russell 2000 Index
Dec 22, 2017 1,542.93
March 22, 2018 1,543.87
June 22, 2018 1,685.58
Sept 21, 2018 1,712.32
Dec 22, 2018 1,292.09 (-24.5% last 3 months, -16.3% last 12 months)
Lastly, let's compare the budget deficits for the various months, to see if the Tax Scam "paid for itself", as GOPs have claimed for years, and let's use the most recently-updated CBO projections from this month.
That rising deficit ties the hands of both the Fed and Congress from being able to handle any downturn in the economy with more stimulus.= Also remember that jobs are usually the last things to start turning down in a recession (they’re also the last to pick up when growth resumes). Ruh roh.
Yeah, I don't think this Tax Scam is working out well 1 year later, do you?
I just added together the check stubs of me and my wife, and ran it through the 2018 tax form and 2018 tax table, and it sure looks like we'll be among the millions sending a check to DC in a few months.
ReplyDeleteA whole lot of others in the working, middle and upper-middle classes won't be doing that, and they are going to be in for a helluva shock. I have a hard time believing that this won't drop consumption - which is the only thing keeping the economy afloat as we end 2018.