Trump Says He’s Exploring ‘Various Tax Reductions,’ and the Economic Data He Loves Shows Why
Some of the administration’s favorite data points are now flashing warning signs about investment, jobs and growth.
Last fall, administration officials displayed a series of charts that showed how President Trump’s economy was outperforming President Barack Obama’s.
But many of the indicators officials used to showcase a Trump-fueled economic “boom” have fizzled on the back of the president’s escalating trade fights.
On Tuesday, Mr. Trump confirmed that he was considering “various tax reductions,” including a payroll tax cut, to stimulate an economy that is beginning to slow.
Companies that Mr. Trump has pointed to as signs of economic strength are now warning of weakness. United States Steel, an early champion of Mr. Trump’s metal tariffs and a frequent mention in the president’s Twitter feed, is idling workers and slowing production at a plant in Michigan. Home Depot on Tuesday lowered its sales outlook for the year as it braces for consumer spending to take a hit from Mr. Trump’s Chinese tariffs.
Consumer and small-business optimism have fallen, and two in five economists surveyed by the National Association of Business Economists now expect the economy to slip into a recession this year or next. Blue-collar job growth has fallen to its lowest level since Mr. Trump took office, and key surveys of manufacturing activity are near recession levels. Economic growth, which Mr. Trump once promised would soar as high as 5 or 6 percent annually, is now running at about a 2 percent annualized pace.
Mr. Trump, speaking to reporters at the White House, continued to portray the economy as “incredible” and played down any chance that the United States could enter into a recession. Any tax cut, he said, would not be done as a defensive move.
“I’ve been thinking about payroll taxes for a long time,” he said. “Whether or not we do it now, it’s not being done because of recession.”
In addition to potentially cutting payroll taxes, which would benefit workers by putting more money in their paychecks, Mr. Trump told reporters that he was thinking about unilaterally reducing capital gains taxes. Such a move would largely benefit wealthy investors by reducing the amount of taxes owed on profitable sales of stocks, bonds and other investments.
The economy is still growing and unemployment remains at a 50-year low. But several of the administration’s favorite economic data points now show unmistakable signs of a slowdown. Business investment has stalled and it slipped backward in the spring.
The indicators suggest that the effects of Mr. Trump’s trade fights with China and Europe and a slowdown in global growth are dragging on the American economy and eroding the short-term boost from the president’s 2017 tax cuts.
Economists, including those at the Federal Reserve, say uncertainty from Mr. Trump’s trade policies and the impact of higher tariffs are the biggest threat to the American economy. Mr. Trump is prepared to impose new rounds of tariffs on imports from China in September and December, which would affect a large batch of consumer goods, and he has threatened to impose tariffs on imported automobiles next year.
Mr. Trump suggested on Tuesday that his fight with China would be worth some economic pain — including a brief recession — if it helped reduce America’s $500 billion trade deficit in goods with China.
“Whether it’s good or bad, the short term is irrelevant,” he said. “We have to solve the problem with China because they’re taking out $500 billion a year plus. And that doesn’t include intellectual property theft and other things. And also, national security, so I am doing this whether it’s good or bad for your statement about, ‘Oh, will we fall into a recession for two months?’”
It is unclear when — or if — the economy will tip into recession, but much of the economic progress that the White House has cited has already lost steam.
Last September, administration officials walked reporters through charts that they said showed the economy, under Mr. Trump, outperformed what had been its trend in Mr. Obama’s second term.
“I can promise you that economic historians will 100 percent accept the fact that there was an inflection at the election of Donald Trump and that a whole bunch of data items started heading north,” Kevin Hassett, then the chairman of the White House Council of Economic Advisers, told reporters.
Nearly a year after that briefing, almost every data point the administration presented has headed south.
Perhaps the most significant shift has come in capital investment, which Republicans inside and outside the administration promised would skyrocket after Mr. Trump signed a $1.5 trillion tax package that included steep cuts in the corporate tax rate and other incentives for companies to invest immediately. The charts showed nonresidential investment — money pumped into things like plants, property and equipment — surging to 8 percent growth under Mr. Trump.
New versions of those charts, updated by The New York Times to include more recent economic data, show investment growth was already slowing, or was on the cusp, last September. By this spring, it had fallen below the average quarterly growth rate for Mr. Obama’s second term.
Comentários
Postar um comentário