ECONOMY/FEDERAL RESERVE/GOP/TAXES/TRUMP AS PRESIDENT: “The tax cuts Republicans enacted in late 2017 will likely provide less of a boost to economic growth than many forecasters predict—and possibly none at all—economists at the Federal Reserve Bank of San Francisco said Monday [7-9-18]. That’s because the changes took effect at a time when the economy was already firing on all cylinders. As a result, there are fewer unemployed workers, spare resources and idled factories ready to kick into action than there would have been during a downturn. Citing a bevy of recent research, economists Tim Mahedy and Daniel J. Wilson said fiscal stimulus measures tend to make a bigger splash when there is more slack in the economy…Among the research Messrs. Mahedy and Wilson cited were estimates of the so-called fiscal multiplier, or the response of gross domestic product to changes in tax and spending policy. While some of the research found there was merely a larger impact from stimulus measures during recessions than during expansions, other ‘literature on fiscal spending multipliers suggests an even smaller boost, as low as zero…’ Messrs. Mahedy and Wilson’s findings run counter to many economists’ predictions the tax law—projected to add about 16%, or $1.6 trillion, to the federal deficit between 2018 and 2027—will provide a meaningful short-term lift to the economy.”
–Paul Kiernan, “Tax Law May Stimulate Economy Less Than Expected, or Maybe Not at All, S.F. Fed Economists Say,” The Wall Street Journal, July 10, 2018 8:14 am