Saturday, July 30, 2016

Make America Grow Again:The economy is stuck on 1% growth as business investment stalls

From a WSJ editorial. Excerpts:
"since last September the economy has pumped the brakes from the 2.2% average from 2012-2015 into a near-stall speed of about 1%. Seven years after the recession ended, President Obama on Wednesday took credit for an economy that he called “stronger and more prosperous than it was when we started.”"

"The President didn’t mention that the current recovery, the one on his watch that began in June 2009, is easily the weakest since World War II."

"business investment fell at a 2.2% pace[in the 2nd quarter], and companies ran down inventories for the fifth consecutive quarter." 

"The investment plunge is a signal that business is on strike, or at least depressed by uncertainty. Most CEOs will be risk-averse and conservative with their balance sheets until they see signs of a growth rebound, even though they’re sitting atop piles of cash and the cost of capital is at all-time lows. They will also hold off investing until they have a better sense of the future tax and regulatory burdens they are likely to face next year.

They can’t be re-assured by what they heard in Philadelphia, where the Obama-Clinton Democrats promised more of the policies that have stifled growth the last eight years. “Wall Street, corporations and the super-rich are going to start paying their fair share of taxes,” Hillary Clinton declared.

Start? The richest 1% already pay about 38% of federal income tax revenue. And perhaps Mrs. Clinton will disclose which sage economic advisers have told her that raising taxes on business will yield more business investment. We were taught that if you tax something you get less of it. Mr. Obama’s unprecedented wave of regulatory costs is another main reason business isn’t investing. Yet Mrs. Clinton promised more costly rules on finance, health care, drug prices, mandated wages and benefits, and more."

No comments:

Post a Comment