The question you have to ask yourself; what will I do with extra tax money from the Trump tax cuts this year. That’s a tough one for both you and economic analysts. On one hand, you would love to save, and increase the abysmal U.S. individual savings rate. On the other hand, it sure would be nice to have less credit card debt by paying it down with tax savings. But deep down, nothing is really better than just going out and spending the newfound gains on purchasing something you want. What will U.S. consumers do? One must remember that while increasing savings and paying down debt is absolutely a right thing to do, spending has a place in the economy too. Two-thirds of Gross Domestic Production (GDP) is made up of consumer spending. This can be a good thing. The Reaganomics trickle-down effect put more money in consumer pockets by cutting taxes, thus creating a demand-side growth model where the trickled-down money went back into circulation to businesses who used this boost to create additional jobs, which helped unemployment and GDP growth.
“The economy continues to create jobs in significant numbers and tax cuts are putting more money in households’ pockets,” ING chief international economist James Knightley wrote in a note. “We suspect the cash flow story will win out for now, implying a positive outlook for consumer spending.” This is good news for retailers who’ve seen sales slump for three quarters in a row — the largest running decline since 2015, according to Bloomberg. There you have it.
The White House will be waiting on pins and needles for the release of Q1 Retail Sales data due out Monday from the Department of Commerce, where economists are expecting a 0.4% rise, according to Bloomberg Analytics.
One wonders when the democratic left will stop going to the well with the tax break being for the “1 percenters” and big corporate America. With that said, their ideology goes hand in hand with their anti-capitalism Marxist rhetoric. Guess what Nancy Pelosi, every man, woman and child in the United States is in the upper “1 percent” of income per capita per person in the world. Chuck Schumer is a Harvard guy, surely he can do the math. To the regret of the new world order types, this is a tax bill that puts American business and American workers first. George Soros will be digging deeper into his British pound stash to keep the world elite believing that Trump and American sovereignty will disappear. But I digress. Oh yes, retail sales. While the modest bump in numbers for March is a political victory for Trump, it is not anticipated by private economists to increase Q1 GDP in any meaningful way.
Plain and simple. Both Democrats and republics are for job growth. The only difference is the democrats hate big business, which employs those looking for jobs, while Trump and the Republicans love workers as well as their big corporate employers. The proof will be in the pudding when and if the American worker receives the benefit of this tax cut, and consumer sentiment rises as a result.