News flash! U.S. economy already looks strong

Does America really need another tax cut to boost the economy? President Trump and many Republicans in Congress think...

Posted: Dec 14, 2017 10:19 PM
Updated: Dec 14, 2017 10:19 PM

Does America really need another tax cut to boost the economy? President Trump and many Republicans in Congress think so. But if you look at the latest economic data, it looks like consumers are doing just fine.

Retail sales rose 0.8% in November, much better than expected. Average Americans clearly weren't holding off on their holiday shopping to see what happened with the tax bill.

And the latest jobless claims numbers showed a surprise drop in the number of people filing for unemployment benefits last week. The weekly jobless claims figure fell to 225,000 -- not far from the 44-year low of 222,000 reported in October.

It's true that wages have yet to pick up dramatically. That's the one weak spot in the labor market.

But many economists note that you can't look at wages in isolation. Inflation hasn't come roaring back either.

So even with meager salary increases, a lot of Americans are still making more money in real terms. And they are putting that money back into the economy by spending.

"Consumers are realizing that the economy is strengthening and that pro-business policies are ushering in an era of sustainable growth," wrote Voya Investment Management market strategists Douglas Cot- and Karyn Cavanaugh in a report Thursday.

"This is not a fake candy-cane high of central bank stimulus, but real economic growth not seen in decades," they added, continuing the holiday themed motif by saying "growth, spending, employment -- nary a stale fruitcake in sight."

Higher levels of economic growth aren't a bad thing per se. But there are questions about whether you can have too much of a good thing.

Related: Janet Yellen says bigger deficits created by tax bill could be a problem

If growth picks up to more than 4% or even 5%, that could spark new worries about the unintended consequences of tax cuts.

If tax reform makes the economy grow too fast and eventually brings about higher inflation, some fear that the Federal Reserve may have to step up the pace of interest rate hikes. That could slow down the economy more than many would like.

RSM U.S. Chief Economist Joseph Brusuelas said in a note Thursday that tax cuts while the economy is already in good shape means "it is now highly likely that growth will be turbocharged in 2018 and 2019."

The end result? Brusuelas thinks the Fed will raise rates four times in 2018 -- more than what Wall Street now expects.

Still, others argue that the impact of any changes to the tax code won't have that big an impact past 2018. Companies and consumers will adjust and economists and Wall Street investment strategists will bake the lower taxes into their growth forecasts.

Wayne Wicker, chief investment officer with retirement planning firm ICMA-RC, said it will be important for Trump and Congress to focus on an infrastructure investment bill in 2018. That could give the economy a longer-term boost and create even more jobs.

CNNMoney's Matt Egan contributed to this report.

Huntsville
Clear
68° wxIcon
Hi: 81° Lo: 59°
Feels Like: 68°
Florence
Clear
69° wxIcon
Hi: 79° Lo: 61°
Feels Like: 69°
Fayetteville
Clear
64° wxIcon
Hi: 81° Lo: 57°
Feels Like: 64°
Decatur
Clear
65° wxIcon
Hi: 82° Lo: 58°
Feels Like: 65°
Scottsboro
Overcast
63° wxIcon
Hi: 83° Lo: 60°
Feels Like: 63°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 17359

Reported Deaths: 618
CountyConfirmedDeaths
Mobile2191115
Jefferson1780102
Montgomery163238
Tuscaloosa73814
Marshall6879
Franklin5457
Lee54033
Shelby50319
Tallapoosa42364
Butler40217
Chambers35325
Walker3442
Elmore3398
Madison3274
Baldwin2839
Dallas2603
Morgan2511
Etowah24811
DeKalb2433
Lowndes23812
Coffee2291
Sumter2206
Autauga2164
Houston2094
Bullock2034
Pike1980
Colbert1782
Russell1670
Marengo1636
Lauderdale1612
Hale1598
Calhoun1543
Choctaw1518
Barbour1501
Wilcox1447
Clarke1422
Cullman1260
Randolph1257
Marion12111
St. Clair1181
Pickens1114
Dale1100
Talladega1093
Chilton1001
Limestone940
Greene944
Winston880
Covington771
Jackson772
Crenshaw763
Macon754
Henry742
Bibb721
Washington686
Blount611
Escambia573
Lawrence480
Geneva400
Conecuh391
Coosa381
Monroe372
Perry370
Cherokee373
Clay272
Lamar230
Fayette150
Cleburne141
Unassigned00

Tennessee Coronavirus Cases

Confirmed Cases: 22566

Reported Deaths: 364
CountyConfirmedDeaths
Davidson504062
Shelby4943111
Trousdale13924
Rutherford119623
Sumner88145
Hamilton79415
Bledsoe6071
Williamson55210
Putnam4795
Robertson4653
Tipton4423
Out of TN4184
Lake4140
Wilson4078
Knox3755
Bedford2834
Montgomery2693
Rhea2100
Hardeman1960
Madison1752
Loudon1430
McMinn14114
Macon1363
Cheatham1230
Bradley1221
Fayette1152
Cumberland1121
Dickson1090
Unassigned920
Blount913
Maury890
Sevier812
Washington750
Coffee730
Wayne640
Gibson631
Monroe622
Sullivan602
Hickman580
Lauderdale561
Franklin531
Greene502
Dyer500
Marion401
Anderson401
DeKalb370
Hamblen362
Smith341
White330
Hawkins332
Lawrence310
Grundy311
Haywood312
Marshall311
Obion301
Henry300
Jefferson280
Carroll271
Overton260
Meigs260
Weakley260
Lincoln250
Warren230
Cannon210
Perry210
Cocke200
Carter191
Campbell181
Morgan170
Jackson170
Crockett162
Roane160
Polk160
Johnson160
Henderson150
Hardin152
Sequatchie150
Humphreys131
Fentress120
McNairy120
Chester120
Giles120
Scott120
Stewart110
Claiborne90
Houston80
Grainger80
Clay70
Benton71
Decatur50
Unicoi40
Union40
Van Buren40
Lewis30
Pickett30
Moore30
Hancock10

 

 

Community Events