Uncategorized

Correction?

A couple of things to point out:

1) As Roberts says, Trump’s tax cuts did help increase the economic expansion. The cuts helped raise profits, which did moderately stimulate economic growth. Even though it’s true that most of the money saved went to stock buy-backs and things like that, some of it did go into the real economy.
2) The (slow) increase in wages is, in fact, tending to destabilize the economy. That’s because increased wages cut into profits, which causes the capitalists to be less willing to invest.
3) What all of this means is that for the economy to grow, workers have to suffer.

Michael Roberts Blog

The US stock market turned volatile this week and has now erased all the gains made up to now in 2018 in just a week or so.  So much for Trump’s boast that things for rich investors have never been better.  The fall in the US market has been matched by similar drops in the European and Asian stock markets.  The all-world index has had its worst performance since the Euro debt crisis of 2012.

Now this fall could just be what market traders call a ‘correction’ and not a full ‘bear market’, when the prices of shares enter a long and deep decline.  But it could be that investors are beginning to fear that the boost to profits and sales that the Trump tax cuts generated is soon to be over, while interest rates (the cost of borrowing to invest or buy back shares to boost prices) are rising…

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Categories: Uncategorized

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