US Economy 2018

US consumer demand will dictate how corporations will respond to the windfall of cash it will experience with the 2018 corporate tax reductions.

 

US corporate debt is $1 trillion. US household debt is $13 trillion. Mortgage interest rates are 3.04% for 15 year and 3.74% for 30 year mortgages. US federal debt is $20.3 trillion. US federal liabilities are $124 trillion. State and local government debt is $1.88 trillion. US federal spending has risen from $2.2 trillion in 2000 to $4.1 trillion in 2017. The US trade deficit in goods was $750 billion in 2016.

 

Corporate cash repatriation could cause $4 trillion in cash to return to the US. Corporations will have the option to invest in US operations, pay down corporate debt or hold on to cash to reinvest in acquisitions and US expansion. The reduction of the US corporate tax rate from 35% to 21% will allow companies to relocate operations back to the US.

 

There is pressure on corporations who manufacture goods for the US market to move more of their manufacturing operations to the US and hire US citizens. We should see more Japanese automobile manufacturers opening new plants in the US. We should also see US electronics companies expanding in the US to protect their intellectual property. We could see new manufacturing plants making a variety of products return to rural counties in the US.

 

Individual income tax reductions could free up cash for taxpayers to keep the cash to pay their bills on time, pay down debt or use it for necessary purchases like repairs and maintenance.

 

The Federal Reserve interest rate has moved from 1.25% to 1.5%. The 10 year Treasury Bill yield is down from 2.39% to 2.33%.

 

The Dow is up from 18,000 to 24,800. US GDP grew from $18.6 trillion to $19.3 trillion. The big winners are those who own stocks and includes 401K holders and pension plans.

 

The target for the US National Debt should be 30% of GDP and that would bring the debt down to $6 trillion. The federal budget needs to be balanced and that would require spending cuts of $700 billion.

 

Norb Leahy, Dunwoody GA Tea Party Leader