Wednesday, July 11, 2018
The Fed: GOP Tax Cuts May Not Boost Economic Growth
Federal Reserve Bank of San Francisco, Fiscal Policy in Good Times and Bad:
Recent U.S. federal fiscal policy has taken a decidedly procyclical turn, driven primarily by the large and front-loaded tax cuts enacted by the 2017 Tax Cuts and Jobs Act. Many analysts have forecast large increases in GDP growth over the next two to three years as a result. However, recent research finds that the effects of fiscal stimulus on overall economic activity are much smaller during expansions than during downturns. This suggests these forecasts may be overly optimistic.
- Bloomberg, Growth Benefits of U.S. Tax Cuts May Be Overestimated
- Fiscal Times, Why the GOP Tax Cuts May Not Boost Growth
- Reuters, Tax Cuts to Give Little Lift to U.S. Economy: Fed Paper
- Wall Street Journal, Tax Law May Stimulate Economy Less Than Expected, or Maybe Not at All, S.F. Fed Economists Say
The headline is misleading. The study says that the tax cuts are credited for boosting economic growth, but that the effects diminish as growth continues, affecting many forecasts. Likewise, studies show that penicillin becomes less effective after it has cured the infection.
Posted by: Woody | Jul 12, 2018 9:30:30 AM