U.S. Outlook: Are corporate tax cuts making a difference?

Posted By Scott Anderson In Economic Outlook | No Comments

The Tax Cuts and Jobs Act, which passed in December 2017, made several changes to federal taxes for businesses, including the full expensing of certain machinery and equipment.

Close-up on piles of $100 billsBut has the highly anticipated surge in business spending materialized?

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on July 20.

Key observations:
  • Business equipment spending growth decelerated from 11.5% annualized in the fourth quarter of 2017 to 5.6% in the first quarter.
  • The amount of cash sitting idle on corporate balance sheets hit a record high of about $1.2 trillion in the first quarter of 2018, an increase of almost 250% since the recession ended.
  • There is increasing evidence that a sizable portion of the tax cut is being funneled into stock buybacks.
  • Our outlook calls for nonresidential fixed investment spending growth to accelerate modestly from 4.7% in 2017 to 6.4% this year and then slow to 5.0% in 2019.

Read my full report. [1]

Article printed from Bank of the West: https://changematters.bankofthewest.com

URL to article: https://changematters.bankofthewest.com/2018/07/20/u-s-outlook-corporate-tax-cuts-making-difference/

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[1] Read my full report.: http://blog.bankofthewest.com/wp-content/uploads/2018/07/BankoftheWest_USOutlook_07_20_18.pdf

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