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Trump tax reform! Latest CBO update shows increase in deficit projections of 1T (1 Viewer)
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Footballguy
Arsenal of Doom
Footballguy
Did anyone mention that the yield curve just inverted? It’s been flat for a while and just inverted this week. It’s a leading indicator that has predicted the last 7 recessions.
It might tick back positive so it’s not panic time, but in the context of an economy producing these deficits with near full employment it’s an uncomfortable prospect.
I mean a recession is inevitable but at least with the Bush tax cuts we had 4-5 years of pretty solid growth so the deficits had started to taper a bit before the crash. My biggest fear is a recession hitting in the next 2 years and we’re looking at 2 trillion dollar annual deficits with little fiscal room to do much.
It might tick back positive so it’s not panic time, but in the context of an economy producing these deficits with near full employment it’s an uncomfortable prospect.
I mean a recession is inevitable but at least with the Bush tax cuts we had 4-5 years of pretty solid growth so the deficits had started to taper a bit before the crash. My biggest fear is a recession hitting in the next 2 years and we’re looking at 2 trillion dollar annual deficits with little fiscal room to do much.
The Commish
Footballguy
And this will be all you hear in this admin's defense even though the rest of the paragraph is the most important pieces.
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Are you saving the extra money or buying something?Our total tax % went from 27% last year to 19% this year.
Last year we paid about $2500, this year was about $500. Getting rid of AMT and going with standard deduction.
State tax remained the same.
Thanks President Trump!
jamny
Footballguy
We're not getting any extra money, we're paying less. I haven't made a financial decision based on my tax return since I was in my 20's. It is what it is.
One by One, Global Bond Markets Are Flashing the Same Warning.
Good news: interest rates will remain low. Bad news: sustained GDP of 3% or greater is unlikely and the tax cuts won't pay for themselves. You can't blame Trump for the cyclical nature of economies, but you can blame him and the GOP majority for the iconoclastic projections justifying their signature legislation.
Good news: interest rates will remain low. Bad news: sustained GDP of 3% or greater is unlikely and the tax cuts won't pay for themselves. You can't blame Trump for the cyclical nature of economies, but you can blame him and the GOP majority for the iconoclastic projections justifying their signature legislation.
The Commish
Footballguy
Everything is pointing to <2.5 GDP for the year. Most likely around the 2.1 range. Tough to comprehend getting to this point so quickly with the trajectory we were on. I can't imagine what the deficits for 19,20 are going to look like....not going to be pretty.
Hadn't noticed the nowcasts had fallen this far: https://www.frbatlanta.org/cqer/research/gdpnow.aspx
Need to start doing closer tracking of the leading indicators. We may be in a recession this year...
The Commish
Footballguy
seems that it is most likely the end of this year, beginning of next. The best part will be the blaming of the Dems. Those gymnastics will be phenomenal given no new legislation has been passed in this area since all three branches were controlled by the GOP
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Probably the Dems fault for not passing tax cuts 2.0. Because we saw how juicing the economy with tax cuts on the wealthy to accelerate growth has worked for the past year....
fantasycurse42
Footballguy Jr.
IDK about this year, it's possible, but firing a stimulus bullet towards the latter stages of an expansion was idiotic no matter how you shape it.
Would've been perfectly okay humming along at 2% (+/- a little) and saving that for later. Would've been even better giving the consumer a massive break and having the corporations eat ####... They took this money and did nothing to help the economy with it, who could've seen this this coming?
fantasycurse42
Footballguy Jr.
Interesting read, he does make the argument endlessly for a rate cut now - I'll say this much on that topic, and why I don't know what that will really do:
1) The cost of money is cheaper today than it was a year ago, before 3 rate hikes (for mortgages & autos - I need to check on credit cards, but honestly, anyone driving that debt up should be held liable, so I don't really give a ####).
2) 25 basis points - I've made this argument endlessly, what does 25 basis points really do?
We have become a society much closer to the zero bound as he noted, and while he touched on room to cut and nontraditional monetary policy tools, we know what those nontraditional tools really are, QE, and we hit our next real rough patch, whenever it is, central banks will just print more money and more QE - we'll see QE4, 5, 6, 7, etc... While I don't know when it will be, good chance all the QE brings some hyperinflation one day far into the future.
Being that I believe QE will become the new normal tool for the CBs all over the world, I've been upping my allocations to gold from 5-10%, closer to 20-25%. Gold, the QE hedge!
While I hate Trump and think he is a moron, I can blame him for tax cuts, I can blame him for nominating a moron like Moore, and I can blame him for ruining what is perceived as Fed independence, but I can't blame him for this new norm of money printing and nonexistent interest rate environment we'll continue to live in.
Tim Duy is certainly dovish, but he always provides a good summary of the Fed's thinking.
An inverted yield curve is not normal for the US economy and signals that money is already too tight. Cutting the short rate today helps relieve that pressure. Waiting too long means the rate will eventually need to full further making your prediction of QE more likely. There is a whole lot going on in the economy besides auto-lending and mortgage rates, however higher rates on mortgages late last year did have an impact.
fantasycurse42
Footballguy Jr.
I agree, but housing is close to the top in terms of importance, imo. Rates absolutely played a huge part in housing, no questions asked.
Today on a 30 year $300k mortgage, you're about $115 dollars cheaper a month than 4.5 months ago.
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Yes some places have cooled. The fall in rates recently will help.
The real key for me to watch right now are the high frequency employment, transit, and industrial numbers.
jamny
Footballguy
Former Fed Chair Yellen says the recession indicator in the bond market could mean a rate cut not a downturn
HONG KONG — Janet Yellen, the former chair of the Federal Reserve, said Monday the recent triggering of a recession indicator in the U.S. bond markets could signal the need for an interest rate cut and not a prolonged economic downturn.
Stocks tumbled Friday after an inversion of the so-called yield curve in the U.S. bond markets. This occurs when short-term rates surpass their longer-term counterparts, which hurts bank lending profits and is considered a warning sign of recession.
Yellen, who led the Fed from 2014 to 2018, was asked at a Hong Kong conference about the yield curve inversion and whether it signals a looming downturn.
"My own answer is no, I don't see it as a signal of recession," Yellen said during a question and answer session at the Credit Suisse Asian Financial Conference.
"In contrast to times past, there's a tendency now for the yield curve to be very flat," she said, adding that it's now easier for it to invert — which traditionally meant investors had become concerned about a future downturn. In technical terms, it's when the spread between the three-month Treasury bill yield and the 10-year note rate turns negative, which happened on Friday for the first time since 2007.
"And in fact it might signal that the Fed would at some point need to cut rates, but it certainly doesn't signal that this is a set of developments that would necessarily cause a recession," Yellen added.
Yellen, a distinguished resident fellow at the Brookings Institution, said she doesn't see a recession as "particularly likely" though she did stress that the U.S. economy is indeed slowing.
"The U.S. is certainly experiencing a slowing of growth," she said. The economy expanded 3.1 percent last year but the Fed's most recent outlook is for growth of 2.1 percent this year, which Yellen said is close to potential.
"So that's not a dangerous situation," she said. "So, yes, growth is slowing, but I don't see it slowing to a level that will cause a recession."
Under her tenure, the Fed in December 2015 raised its key interest rate for the first time n nearly a decade. It was the start of an effort to hike rates back to a point where policymakers could have some leeway to reduce them again in the face of any future downturn in the world's largest economy. The Fed under her successor, Chairman Jerome Powell, had continued to nudge rates higher.
But the policymaking Federal Open Market Committee decided last week in a unanimous decision to hold them steady, indicating that it's likely that no more increases will come this year in a sharp dovish turn from projections in December. The FOMC in a post-meeting statement indicated it would remain "patient" before adopting any further rate increases.
HONG KONG — Janet Yellen, the former chair of the Federal Reserve, said Monday the recent triggering of a recession indicator in the U.S. bond markets could signal the need for an interest rate cut and not a prolonged economic downturn.
Stocks tumbled Friday after an inversion of the so-called yield curve in the U.S. bond markets. This occurs when short-term rates surpass their longer-term counterparts, which hurts bank lending profits and is considered a warning sign of recession.
Yellen, who led the Fed from 2014 to 2018, was asked at a Hong Kong conference about the yield curve inversion and whether it signals a looming downturn.
"My own answer is no, I don't see it as a signal of recession," Yellen said during a question and answer session at the Credit Suisse Asian Financial Conference.
"In contrast to times past, there's a tendency now for the yield curve to be very flat," she said, adding that it's now easier for it to invert — which traditionally meant investors had become concerned about a future downturn. In technical terms, it's when the spread between the three-month Treasury bill yield and the 10-year note rate turns negative, which happened on Friday for the first time since 2007.
"And in fact it might signal that the Fed would at some point need to cut rates, but it certainly doesn't signal that this is a set of developments that would necessarily cause a recession," Yellen added.
Yellen, a distinguished resident fellow at the Brookings Institution, said she doesn't see a recession as "particularly likely" though she did stress that the U.S. economy is indeed slowing.
"The U.S. is certainly experiencing a slowing of growth," she said. The economy expanded 3.1 percent last year but the Fed's most recent outlook is for growth of 2.1 percent this year, which Yellen said is close to potential.
"So that's not a dangerous situation," she said. "So, yes, growth is slowing, but I don't see it slowing to a level that will cause a recession."
Under her tenure, the Fed in December 2015 raised its key interest rate for the first time n nearly a decade. It was the start of an effort to hike rates back to a point where policymakers could have some leeway to reduce them again in the face of any future downturn in the world's largest economy. The Fed under her successor, Chairman Jerome Powell, had continued to nudge rates higher.
But the policymaking Federal Open Market Committee decided last week in a unanimous decision to hold them steady, indicating that it's likely that no more increases will come this year in a sharp dovish turn from projections in December. The FOMC in a post-meeting statement indicated it would remain "patient" before adopting any further rate increases.
Also, credit cards are going be based off a prime so anyone revolving at a variable rate sees a 1:1 passthrough of Fed hikes.
Sheriff Bart
Footballguy
Fed refund went from $6500 in 2017 to $2000 in 2018. Of course there was an extra $10 a week in my paycheck so there's $520. Middle class "tax cut" only cost me $4000. Thanks Trump you jackal.
The Commish
Footballguy
James Daulton
Footballguy
You must live in one of dem dare fancy, elite liberal states. You know the ones that have the most money and best education?
I much prefer me some high school dropouts to damn snobby folks with book learnin.
Sheriff Bart
Footballguy
Right? At least that money is going to people that find it insignificant and will have no consequence to their lives whatsoever.The Commish said:Clearly you're just lying
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The Z Machine
Footballguy
Nah, there's like 2000 small business owners that are making out like bandits of the changes. But since you work for the man, you get the shaft.
James Daulton
Footballguy
Sheriff Bart
Footballguy
That was definitely part of it. Trump and gang decided to eliminate business expenses if you aren't an actual principal. What a bunch of bull####.
The Z Machine
Footballguy
GoBirds
Footballguy
Not true at all, I own a small business and it is very significant to me that I’ll have a refund instead of a gouging payment and my quarterly payments this year should be about half of the previous year. Instead of being choked by lack of cash flow we have funds for a new hire and possibly new jobs.
Not that I’d expect you to acknowledge those benefits to those of us that need it, based on your posting track record I think we all would bet the ranch you would be complaining if it benefitted you or not.
Sheriff Bart
Footballguy
Yes. I knew I was going to get screwed. Of course my employer could have stepped up but they like to act as if it's a privilege to have a job there. I can't leave because I need the health insurance. Neat system.
Sheriff Bart
Footballguy
The richest 1% got 84% of the trillion dollar tax cut while my taxes went up. You're right I should just be happy you didn't take it all. How dare I complain.
GoBirds
Footballguy
I’m not close to the 1%, just a guy with a small business. Trust me, no one in here expected you not to complain true or not.
James Daulton
Footballguy
Seeing 1st quarter gdp estimates under 2%. This is the best economy ever? The Feds fault for that back breaking 2.5% interest rate? Oh that’s right, just more lies from the liar in chief.
James Daulton
Footballguy
The richest received almost all the benefit of the tax cut. That’s why it only gave a small, temp bump to the economy. Otherwise we wouldn’t be under 2%.
SAD
Sheriff Bart
Footballguy
GoBirds
Footballguy
Maybe instead of spending hours a day complaining online look into going into business for yourself in your field. The tax laws are beneficial to many not just the 1% like you try to say and you would also be providing jobs in your community. Definitely making a bigger difference than you do in here, something to consider.
Sheriff Bart
Footballguy
Sheriff Bart
Footballguy
Here's another tought, how about having fair tax laws? While you're at it, please pay down the deficit.
I don't know how old you are but I'm approaching retirement. There are about a dozen reasons why I'm not going to start a business. Trump and the republicans torched their message of fiscal responsibility to help out the very wealthy at the expense of almost every other American and the nation's children. Just go ahead and own it.
Ramblin Wreck
Footballguy
Mine went down and I'm not anywhere close to the top 1%. It's good you are paying your fair share now so everyone can benefit.
GoBirds
Footballguy
If you are approaching retirement you must be doing very well financially, congrats on that I wish I was close. That said paying your fair share like others is part of the deal. Would be nice if government was more responsible but pinning it all on Trump is obviously extreme bias as Obama came in and told George W to hold his beer when it came to this. This trend has been bad for awhile.
dkp993
Footballguy
You and I have discussed this tax topic before but what I find interesting is you assume that being antiTrump means the person is probably lying about their tax liability this year vs last; why under those conditions should anyone believe you benefited being that you’re proTrump. Isn’t it every bit as likely you would lie to protect your position?
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GoBirds
Footballguy
Not all, just the ones that are 100% always on one side and in here religiously doing it.
Fair point for sure but review the new law and the 20% of profit not taxed and allowance of accelerating depreciation. I guess I could be pretending to own a small business but I think if I was going to make something up it would be much more glamorous and in the 1% causing the outcry.
Sheriff Bart
Footballguy
I've been working for over 40 years and don't have the physical capacity to work non-stop because of a horrible law put into effect just a year ago. I appreciate your softer reply though even if you did call me a possible liar. You are more admirable than @Don't Noonan that likes to click the crying icon because he wants to be passive aggressive but is also scared of getting banned.
Like I replied to @The Z Machine the man reason my taxes went up were because I can't deduct business expenses. Why eliminate that for employees? Shouldn't this help small business because they then aren't on the hook for reimbursing? The other was eliminating charitable contributions. I don't get that either and it's just evil IMO. I wasn't going to scale back though but I'm sure many will if they haven't already. Raising the standard deduction offset my mortgage interest deduction.
The Z Machine
Footballguy
The charitable contributions weren't eliminated, but you need to itemize to get the deduction. I was just over the line for itemizing vs. standard (due to mortgage interest), so they made it in. Didn't change much for last year, but I'll be selling more things instead of donating them now.
Ramblin Wreck
Footballguy
Eliminating my family's healthcare plan and replacing it with something half as good at best and costs twice as much was evil.
timschochet
Footballguy
Both you and Sheriff Bart should really stop using the word evil. It’s really inappropriate with regard to the issues you’re discussing.
The Z Machine
Footballguy
Can you refresh my memory on how that happened? Was this comment provided, or were you buying on the open market prior to the ACA?
TobiasFunke
Footballguy
I don't know why you people are arguing with Trump supporters in this thread or the health care thread. The tax bill was awesome for everyone and a vital confirmation of the importance of wealthy heirs and hedge funds, the universally adored twin engines of the American economy. Trumpcare sounds amazing and will be a much-needed panacea for a nation hurting from the disaster of Obamacare and its ridiculous protections for people with pre-existing conditions.
I just hope the Republicans don't campaign on these two incredible success stories. They'll be unstoppable once again, just as they were in 2018 before those cheating Californians changed the narrative to allow the Dems to save face.
I just hope the Republicans don't campaign on these two incredible success stories. They'll be unstoppable once again, just as they were in 2018 before those cheating Californians changed the narrative to allow the Dems to save face.
