This article was published by The McAlvany Intelligence Advisor on Friday, January 5, 2018:
It may be a little early to tell, but at the moment the middle class is doing just fine. Life goes on; if Armageddon occurred, the media missed it. That “punch in the gut for the middle class” is about to be caused by heavier wallets, thanks to tax cuts showing up in their February paychecks.
For hundreds of thousands, that punch in the gut was immediate:
AT&T announced that each of its 200,000 employees was going to be getting a $1,000 bonus;
Third Fifth Bankcorp said it would be giving similar bonuses to its 13,500 employees but upped the ante: it will be raising the minimum wage it pays its people to $15 an hour;
Comcast announced $1,000 bonuses to its 100,000 employees and $50 billion in improving broadband and network infrastructure for its customers;
Bank of America said it would be giving similar bonuses to 145,000 of its employees;
Apple, Inc. is repatriating $252 billion of funds it has been holding overseas; and
Bob Parson, founder and CEO of GoDaddy, not only announced bonuses of $1.3 million to his people, but explained why: “The lowered federal tax burden on businesses will increase investment, entrepreneurship, and corporate philanthropy.”
It’s all so simple that Democrats missed it. They are likely to pay for their economic and political ignorance at the polls in November. Peter Ferrara served President Ronald Reagan in his Office of Policy Development and is now Senior Fellow at the conservative Heartland Institute. Ferrara holds that the mid-term elections, which in the past have hammered the party occupying the White House, will instead punish the Democrats:
The first reason is that tax reform is going to work spectacularly with Trump’s deregulation to finally restore booming economic growth of four percent a year or more. Just like President John F. Kennedy’s tax cuts in the 1960s and President Ronald Reagan’s tax cuts in the 1980s, the critical tax rate cuts in the 2017 tax reform legislation will result in skyrocketing investment, flooding job creation, surging wages, swelling labor supply, rocking business expansion, rolling business creation, and booming growth.
This will cost Democrats dearly in the November midterms, for a very simple reason: “This economic boom will boost Republican candidates by November, all the more because not one Democrat voted for the tax reform.”
Further, the average voter will shortly discover that Democrats and the mainstream media have been lying to him about the impact of Trump’s tax reform:
That will result in part because tax reform cuts taxes on the middle class and working people directly, which the Democrat-controlled media has strived mightily to keep secret….
This is why tax reform focused on cutting corporate and business taxes, bravely doing the right thing for working people and the middle class. Too many voters do not understand this because the Democrat-controlled media won’t tell them.
Reality, according to Ferrara, will shortly kick in:
Democrats will surely be hurt when voters realize that they and their media lied to them about tax reform. Blue collar workers and the middle class will see their taxes decline, and the fabrications about over 80 percent of the tax benefits going to the top 1 percent will be disrobed.
Those voters will also see nice increases in their 401(k) statements, thanks to the continuing bull market in stocks. The surprising thing about the Dow’s volcanic eruption through the 25,000 level on Thursday is that it was matched by all-time highs in other key stock market indexes such as the S&P500 Index, the NASDAQ, and the Russell 2000.
Even more surprising is that this isn’t happening in an American vacuum: Japan’s Nikkei Stock Average hit a new 26-year high, rising above 23,000 for the first time since January 1992. The Hang Seng (Hong Kong) Index just touched a new 10-year high while major stock market indexes in New Zealand, the Philippines, and Thailand also set new records on Thursday.
What aren’t surprising are the reasons why: the American economy, significantly unfettered from excessive regulations for the first time in eight years, is not only reviving but getting stronger with each new economic report. October, November, and December sales figures were far ahead of forecasters’ predictions, with year-end results coming in way ahead of expectations. New car sales, new construction, energy development, not to mention year-end bonuses and announcements of salary increases and new capital investment following passage of tax reform are all driving the American economy higher.
Nearly a million more Americans are working now than a year ago, dropping unemployment to 4 percent, with the Fed predicting numbers approaching 3.5 percent as the economy continues to steamroll ahead. The country’s gross domestic product (GDP) is running at more than 3 percent, astonishing even the most optimistic forecasters. Coupled with highs in investor, business owner, and consumer sentiment, the stage is set for further improvements into 2018.
All the stock market is doing is predicting the future.
It may also be predicting the removal of Democrats in November who have wandered off the reservation and continue to deny the new reality. Now that would be a real bonus!
The Wall Street Journal: Dow Industrials Cross 25000
MarketWatch.com: Dow 25K! Here’s what it says about the stock market
Chicago Tribune: Dow hits 25,000 for first time
Peter Ferrara: America’s Booming Economy Will Smash Democrats in 2018