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Trump’s tax cuts are kicking a roaring economy into overdrive

So far, the escalating trade and currency wars aren’t weighing on the weekly stock market fundamentals that I track and discuss below. That’s because the U.S. economy received a big boost from the Tax Cuts and Jobs Act (TCJA) at the end of last year.

Federal tax receipts as a percentage of nominal GDP dropped from 18.2% during the fourth quarter of 2017 to 17.5% during the first quarter of 2018 (Fig. 1 and Fig. 2). That’s the lowest reading since the fourth quarter of 2012. Normally, this ratio drops during recessions, not during expansions. So the TCJA is giving a big boost to an economy that is already at full employment.

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