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Defying the Odds

Defying the Odds
New book about the 2016 election.

Wednesday, June 19, 2019

Economic Clouds

In Defying the Odds, we discuss the tax and economics issue in the 2016 campaign.  The update  -- recently published --includes a chapter on the 2018 midterms. and explains why the Trump tax cut backfired on Republicans.

A boom in employee bonuses handed out by some companies in the wake of the 2017 Republican tax cut proved to be temporary, Labor Department data released Tuesday showed.

Private-sector companies’ spending on nonproduction bonuses fell 24% in the first quarter of 2019 from a year earlier, the largest decrease for the category of benefit costs on record back to 2005.

Those bonus payments jumped in late 2017 and early 2018 after Congress approved its package of tax cuts. Walmart Inc., AT&T Inc. and Wells Fargo & Co. were among prominent employers that announced bonuses in the wake of the new tax law. President Trump and other Republicans touted the bonuses as an example of how the law benefited everyday workers.
Those gains appear to largely have been a one-time windfall. 
Heather Long at WP:
The Federal Reserve did not change interest rates Wednesday but strongly signaled a willingness to cut soon to prevent the economy from slowing further. President Trump has urged the central bank to cut rates for months to boost growth.
Business investment is slowing, uncertainty has increased, and the U.S. economy is growing at a “moderate” pace, the Fed said Wednesday, a notable downgrade from last month when the central bank characterized the economy as “solid.”
The Fed indicated it would take action if the economy shows any more signs of decline.
“In light of these uncertainties and muted inflation pressures, the [Fed] committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” the Fed wrote in a statement.
Wall Street investors are widely anticipating a rate reduction when Fed leaders meet next in late July because of Trump’s trade war and slumping business investment, especially in manufacturing.
“Many on the committee do see a strengthened case for cutting rates," Fed Chair Jerome H. Powell said Wednesday. “News about trade has been an important driver of sentiment in the inter-meaning period. We’re also looking at global growth.