The Wall Street Journal wrote an article recently that implied that the pending tax cuts are predicted to grow the economy much more than originally expected. Of course, this is directly related to the work President Trump has been doing since his election.
Justin Lahart from WSJ’s “Heard on the Street” wrote:
There were several surprises for investors when Republicans unveiled their final tax bill Friday, but the most significant is that they add up to a bigger boost to economic growth next year.
The bigger stimulus could fundamentally change how the market behaves in 2018. Sales and profits will be stronger than most investors expect. But with the unemployment rate low, wage pressures will mount faster, and inflation should pick up more. If the tax plan passes, as seems likely, it could lead the Federal Reserve to raise rates faster, putting the bond market at risk.
The tax plan was always expected to juice the economy, but the Senate version, which passed after the House approved its bill, had relatively modest short-term stimulus. While the stock market kept rising in anticipation of a cut, the bond market hardly budged. The bill unveiled Friday front-loaded more than $200 billion in stimulus for next year. Economists had been penciling in a boost of about a third of a percentage point next year. Now that is looking way low.