By MN Gordon
Remarkable and Extraordinary Growth
Good cheer has arrived at precisely the perfect moment. You can really see it. Record stock prices, stout economic growth, and a GOP tax reform bill to boot. Has there ever been a more flawless week leading up to Christmas?
Here’s what really happened: the government’s minions confiscated everything Santa had on him when he crossed the border and then added it to GDP. You know how it is… if something feels too good to be true… [PT]
We can’t think of one off hand. And if we could, we wouldn’t let it detract from the present merriment. Like bellowing out the verses of Joy to the World at a Christmas Eve candlelight service, it sure feels magnificent – don’t it?
The cocktail of record stock prices, robust GDP growth, and reforms to the tax code has the sweet warmth of a glass of spiked eggnog. Not long ago, if you recall, a Dow Jones Industrial Average above 25,000 was impossible. Yet somehow, in the blink of an eye, it has moved to just a peppermint stick shy of this momentous milestone – and we’re all rich because of it.
So, too, the United States economy is now growing with the spry energy of Santa’s elves. According to Commerce Department, U.S. GDP increased in the third quarter at a rate of 3.2 percent. What’s more, according to the New York Fed’s Nowcast report, and their Data Flow through December 15, U.S. GDP is expanding in the fourth quarter at an annualized rate of 3.98 percent.
Indeed, annualized GDP growth above 3 percent is both remarkable and extraordinary. Remember, the last time U.S. GDP grew by 3 percent or more for an entire calendar year was 2005. Several years before the iPhone was invented.
The stock market bubble takes the traditional route and evolves into a major blow-off. This is a strong hint that it is not going to end on a whimper… [PT] – click to enlarge.
A Cornerstone Promise of the GOP Tax Reform Bill
But despite closing out the year strong, 2017 won’t be the year when annual U.S. GDP growth finally eclipses 3 percent. By our rough calculations, annual GDP growth for 2017, using the Q4 estimate, comes out to 2.92 percent. What to make of it…
Certainly, strong GDP growth is a cornerstone promise of the GOP tax reform bill. Specifically, the promise is that resultant economic growth will pay for the tax cuts. Yet based on the work of one group of number crunchers, the expectation that the U.S. economy will produce 3 percent economic growth in 2018 is wishful thinking. The Tax Foundation, an outfit out of Washington, offered the following assessment:
“According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, and …read more
Source:: Acting Man
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