My favorite Econ professor, Ernest Randa, focused on inventories for predictions.

Posted By: pangloss
Date: Thursday 30 May 2019, at 03:17 pm
Recommended by 4 user(s)

In the first Qtr 2019 economic report there was a big jump in inventories. That's an ominous leading economic indicator.

There was no excess demand for capital when they passed the tax cut. The market was high, P/E ratios were high, there was plenty of money.

Sure enough, the corporate tax cut yielded the highest sock buyback activity in history, not the hoped-for boost in capital investment.

Stock buybacks occur when the company has lots of cash but lacks opportunities for R&D and capital investment. Sitting on mountains of cash makes CEOs look bad - lacking vision for the future, etc. CEOs and their boards of directors get larger bonuses when stock prices are high. So, stock buybacks prop up the stock price, make the financial ratios look better, and executive bonuses are sustained.

All things considered, the economy needed investments in infrastructure more than a corporate tax cut and longer term, reduced deficit spending.

Just my opinion.

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