After Tax Bill Passes, Corporations… Reduce Spending on Capital Goods

Despite the Republican promise that their tax bill would supercharge the economy, orders for capital goods fell after the bill passed:

As Dean Baker points out, this isn’t investment, which can have long lead times, but orders:

According to data released by the Commerce Department orders for non-defense capital goods fell by 1.5 percent in January after dropping 0.4 percent in December. We get the same story even if we pull out volatile orders for aircraft: a drop of 0.2 percent in January after a fall of 0.6 percent in December.

….While investment takes time to put in place, these data are showing us orders. Orders can be made over the Internet or an old-fashioned land line telephone. They don’t take a lot of time….If the tax cuts matter for investment, then companies like GE, Microsoft, and Amazon were making plans as soon as it became clear that the Republican majority in Congress was serious about passing a tax bill. The fact that we are seeing zero evidence of an uptick in investment suggests that tax cuts don’t have much impact on investment.

Patience, Dean! I’m sure new investment will flow eventually. Corporations just need to figure out first how much money they’ll have left over after lining their own pockets with stock buybacks. That takes some time.

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Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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