New York Post columnist John Crudele warns savvy investors that President Donald Trump’s strategy that his massive tax cuts would turbocharge the economy could eventually backfire.
“The U.S. economy — the one and only thing that got Trump elected — isn’t doing as well as people thought just a month ago. And despite a massively dangerous gambit on cutting taxes, it isn’t doing a whole lot more than under the previous guy,” Crudele recently wrote.
Crudele noted that the Federal Reserve Bank of Atlanta’s GDPNow economic-growth index is down to just a 3.2 percent annual gain. On Feb. 4, it had seen the economy growing at a 5.4 percent annual rate during the first quarter of 2018.
The Atlanta Fed is now more in line with the Nowcast GDP that is produced by the New York Fed, which has the economy growing at 3.11 percent during the first quarter.
“Both of those estimates, however, are higher than those of some economists on Wall Street. JPMorgan Chase, for instance, reduced its prediction to an annualized rate of 2.5 percent. It had been at 3 percent until a worse-than-expected inflation rate recently pushed the guess down,” Crudele wrote.
“Inflation is only another way of saying that the price of things is going up. And if stuff is more expensive, people can buy less of it, so economic growth suffers,” Crudele wrote.
Crudele points out that he was against the tax cuts before they were signed into law. “Sure, I like more money in my paycheck. But the danger is the economy wouldn’t grow sufficiently to increase revenue enough to offset the taxes that won’t be collected,” he wrote.
“If the tax cuts don’t generate enough revenue, then all sorts of bad things will happen. Government projections already say the tax changes will increase the $21 trillion federal debt by $1.5 trillion over the next decade,” he wrote.
“My solution was do not mess with tax laws until the economy was doing better. Instead, Washington probably could have gotten the same economic boost — or better — by simply letting Americans have more easy access to the riches that are locked in their retirement accounts.”
However, other respected financial gurus argue that the Trump tax cuts will ultimately boost the American economy.
Veteran economist and CNBC personality Larry Kudlow contends that America is now the “best country” for business in wake of the sweeping tax cuts engineered by Trump.
Kudlow praised the United States’ economy following the tax cuts and proclaimed the country now the “best” for business.
“We are on the front end of an investment boom that’s largely tied to the tax cuts,” Kudlow recently told New York AM 970 radio’s John Catsimatidis on “The Cats Roundtable.
“[It] will be stronger than anything we’ve seen in probably 25 years,” the former Ronald Reagan adviser told Catsimatidis.
“America is once again becoming the best investment environment in the world — the best country in which to do business. And that’s a powerful positive,” said Kudlow, a Newsmax Finance Insider and CNBC senior contributor.
For his part, Trump has taken to Twitter to tout the economy.
"The U.S. economy is looking very good, in my opinion, even better than anticipated. Companies are pouring back into our country, reversing the long term trend of leaving. The unemployment numbers are looking great, and Regulations & Taxes have been massively Cut! JOBS, JOBS, JOBS," Trump tweeted.
(Newsmax wire services contributed to this report).
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