USA: growth at 5.4%?

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Great news for US growth according to the Federal Reserve Bank of Atlanta.

Increasing growth

Today, the Federal Reserve Bank of Atlanta has released a new estimate GDP growth in the first quarter of 2018. According to the Fed, GDP growth could reach the considerable annualized rate of 5.4%.

Although it is still an estimate in the very uncertain art of economic forecasting, this is not uncommon after massive tax cuts.

A historical precedent

While the president Ronald Reagan began - with the support of parliamentarians from both parties - the first phase of a series of tax cuts (known as the Economic Recovery Tax Act (ERTA) in 1981, most of these tax cuts did not effect as from 1 January 1983.

Interestingly, while a negative growth rate was recorded in the second half of 1982, an annualized growth rate of 5.0% was recorded in the first quarter of 1983 and almost 10% in the second quarter of this year. the. A plausible theory explains this phenomenon by the fact that high taxes could actually harm economic activity (labor supply, employment, investment, consumption) and that entrepreneurs waited for tax cuts to take effect. before investing.

One number among others

This excellent forecast follows a report ADP payroll company, which calculated that in January, the US economy would have created 234,000 jobs equally spread across all sizes of companies and in all sectors except IT.

In the same vein, the ISM PMI manufacturing output index is very slight withdrawal at 59.1% compared to its level of 59.3% in December 2017. At the highest level and rising for 17 months, such a figure corresponds to a 4.9% increase in real gross domestic product (GDP) on an annualized basis if we rely on the past relationship between the IMP and the US economy.

This is great news because America needs every dollar of real growth to justify the current levels of Wall Street in a context of rising interest rates.

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