“Until you make the unconscious conscious, it will direct your life and you will call it fate.”
- Carl Jung
Fiscal policy was sorely needed in 2009 when the credit crisis dragged the economy into the worst modern day tailspin, second only to the Great Depression. Corporate tax reform is coming at a time when our economy is 18% larger than it was before the crisis, when the unemployment rate, at 4.1%, is at its lowest level in 17 years.
The architects of the plan believe that a lower tax rate, combined with incentives to expand capital expenditures, will grow businesses, create jobs and spur domestic growth. We agree. The economy is coming off two consecutive quarters of three-plus growth and we expect the momentum can continue into the first half of next year.
Capricious trade treaty terms run the risk of turning our vital manufacturing industries upside down. Free trade is important. Interfering with it is an acute risk that could harm our synchronized global recovery.
Many Republicans see tax legislation as their salvation in the midterms. That’s why many are willing to accept passage at any cost. Their near-term concern is somewhat misplaced, given their virtual lock on the Senate.
Should our forecast of improving growth on the back of business investment play out in 2018, value-oriented sectors, like telecom, financials and energy, could be surprising market leaders. 2018 could represent a healthy broadening of equity market participation.
Download and read the January Outlook for Financial Markets to know more.