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Thread: Moody's Assessment of the Tax Overhaul

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    Troll Magnet Sparko's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    I also experience a LOT of instances of people misunderstanding something I said, and then accusing me of not being truthful, changing my story, back-pedaling, hand-waving, etc. when I post that what is being said does not accurately reflect the meaning I was trying to convey.
    That should give you a clue. If everyone is telling you the same thing, maybe the problem is not with them but you.

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    Quote Originally Posted by Sparko View Post
    That should give you a clue. If everyone is telling you the same thing, maybe the problem is not with them but you.
    I think the folks in this thread are getting a bit...moody.
    Hofstadter's Law: It will always take longer than you expect, even if you take into account Hofstadter's Law.

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Sparko View Post
    From Seer's post in another thread:

    Private payrolls grow by 234,000 in January, vs 185,000 expected: ADP/Moody's Analytics

    Private companies hired 234,000 jobs in January, well above expectations for 185,000, according to ADP and Moody's Analytics.

    Service-related industries led with 212,000 new jobs; manufacturing added 12,000 and construction 9,000.
    The report often differs significantly from the government's more closely watched nonfarm payrolls count, with ADP reporting growth of 242,000 in December vs. the Labor Department's 148,000.

    https://www.cnbc.com/2018/01/31/priv...analytics.html
    We've seen these surges in other months too, Sparko. January numbers are not out yet, and even Nov/Dec numbers are still considered "projected." (https://data.bls.gov/timeseries/CES0..._view=net_1mth). In the 11 months from Feb-Dec, 1.839M jobs were created, averaging 167+K/month. 150K/month is considered "healthy" for the economy. Five out of 11 months were below that number, but the average is in the "healthy" range, and Trump keeps crowing about it.

    Placed in context, however, the same months in 2016 saw the creation of 2.114M jobs (192+K/month) jobs. It might be tempting to attribute that to a Trump bump at the end of the year, but job growth actually slowed at the end of the year (which is normal). Going back to 2015, the same period saw the creation of 2.479M new jobs (225+K/mo). Job growth has actually slowed under Trump. The reason, of course, is fairly straightforward. When Obama left office, unemployment was near record lows. It actually crossed that boundary under Trump, but it does not have much more room to drop without becoming a bit of a problem. Meanwhile, we saw stagmant wage growth under Obama. That makes sense, because wages are not usually increased when unemployment is high. Once we hit the low numbers at the end of 2016, we began to see an uptick in wage growth. That continued into 2017. Trump is taking a lot of credit, but since unemployment dropped 5.2% from the 10% it hit by March of 2010 to the 4.6% it hit the month Trump was elected (0.8% per year, on average), and it has only dropped another 0.5% in the 13 months since then (0.48%/year), there is a significant question about he gets the bulk of the credit (if you subscribe to the theory that presidents have much impact on ANY of this).

    As for GDP, in the 24 quarters from 1Q2011 through 4Q2016, we saw an average GDP growth of 2.041%/quarter. In the 4 quarters of 2017 the average has been 2.525%. That is a bit higher, but also a pretty small sample size. 2014 saw an average of 2.725%. So we don't have enough data, yet, to know if we are going to see a sustained increase. 4Q2017 was back down to 2.6 (https://www.statista.com/statistics/...gdp-in-the-us/), which is a level many economists say should be the "new norm." But that is a misleading statement. If you look at GDP numbers back to the 1950s (https://tradingeconomics.com/united-states/gdp-growth), you see that GDP used to see a LOY more year-to-year variation, sometimes peaking above 15% and sometimes cratering at below -10%. The running average has never been significantly different than it is now. We saw a surge during the period of the Internet bubble, and again during the housing bubble. Beyond that, GDP has hovered, as an average, in the 2-3% range for the past seven decades. Why anyone thinks that is going to change, when previous (even larger) tax cuts did not produce that result, is beyond me.

    Despite his claims otherwise, Trump actually inherited a fairly healthy economy by most quantifiable metrics, and it has not improved significantly beyond that so far.
    Last edited by carpedm9587; 01-31-2018 at 06:19 PM.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.

    -Martin Luther King

  6. #54
    Troll Magnet Sparko's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    We've seen these surges in other months too, Sparko. January numbers are not out yet, and even Nov/Dec numbers are still considered "projected." (https://data.bls.gov/timeseries/CES0..._view=net_1mth). In the 11 months from Feb-Dec, 1.839M jobs were created, averaging 167+K/month. 150K/month is considered "healthy" for the economy. Five out of 11 months were below that number, but the average is in the "healthy" range, and Trump keeps crowing about it.

    Placed in context, however, the same months in 2016 saw the creation of 2.114M jobs (192+K/month) jobs. It might be tempting to attribute that to a Trump bump at the end of the year, but job growth actually slowed at the end of the year (which is normal). Going back to 2015, the same period saw the creation of 2.479M new jobs (225+K/mo). Job growth has actually slowed under Trump. The reason, of course, is fairly straightforward. When Obama left office, unemployment was near record lows. It actually crossed that boundary under Trump, but it does not have much more room to drop without becoming a bit of a problem. Meanwhile, we saw stagmant wage growth under Obama. That makes sense, because wages are not usually increased when unemployment is high. Once we hit the low numbers at the end of 2016, we began to see an uptick in wage growth. That continued into 2017. Trump is taking a lot of credit, but since unemployment dropped 5.2% from the 10% it hit by March of 2010 to the 4.6% it hit the month Trump was elected (0.8% per year, on average), and it has only dropped another 0.5% in the 13 months since then (0.48%/year), there is a significant question about he gets the bulk of the credit (if you subscribe to the theory that presidents have much impact on ANY of this).

    As for GDP, in the 24 quarters from 1Q2011 through 4Q2016, we saw an average GDP growth of 2.041%/quarter. In the 4 quarters of 2017 the average has been 2.525%. That is a bit higher, but also a pretty small sample size. 2014 saw an average of 2.725%. So we don't have enough data, yet, to know if we are going to see a sustained increase. 4Q2017 was back down to 2.6 (https://www.statista.com/statistics/...gdp-in-the-us/), which is a level many economists say should be the "new norm." But that is a misleading statement. If you look at GDP numbers back to the 1950s (https://tradingeconomics.com/united-states/gdp-growth), you see that GDP used to see a LOY more year-to-year variation, sometimes peaking above 15% and sometimes cratering at below -10%. The running average has never been significantly different than it is now. We saw a surge during the period of the Internet bubble, and again during the housing bubble. Beyond that, GDP has hovered, as an average, in the 2-3% range for the past seven decades. Why anyone thinks that is going to change, when previous (even larger) tax cuts did not produce that result, is beyond me.

    Despite his claims otherwise, Trump actually inherited a fairly healthy economy by most quantifiable metrics, and it has not improved significantly beyond that so far.
    those WERE January's numbers, Carpe, according to the link. This sounds like more rationalizing to me. The numbers directly contradict your conclusion in the OP.

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Sparko View Post
    those WERE January's numbers, Carpe, according to the link. This sounds like more rationalizing to me. The numbers directly contradict your conclusion in the OP.
    No Sparko, they can't be. It is a projection. The Bureau of Labor and statistics has not even finalized it's Nov/Dec numbers. They certainly do not have January numbers when we haven't even finished the month.

    And I don't know why you keep coming back to "rationalizing." It's beginning to sound like a convenient way to simply dismiss a post. I was careful to research the data related to the economy, break it down, explain why I thought it means what I claim, and provide the links to the resources so others could double-check my conclusions. If you have a counter, I am happy to listen, but "it's just rationalizing" is a dismissal with no value, pure and simple.

    And I just went back and reread the OP. I'm afraid I am not seeing how this "directly contradicts" what I said in the OP. Indeed, I'm not even seeing how the two are related. The OP was about what companies are likely to do with tax cuts. This is about economic indicators. So...
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.

    -Martin Luther King

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    Troll Magnet Sparko's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    No Sparko, they can't be. It is a projection. The Bureau of Labor and statistics has not even finalized it's Nov/Dec numbers. They certainly do not have January numbers when we haven't even finished the month.

    And I don't know why you keep coming back to "rationalizing." It's beginning to sound like a convenient way to simply dismiss a post. I was careful to research the data related to the economy, break it down, explain why I thought it means what I claim, and provide the links to the resources so others could double-check my conclusions. If you have a counter, I am happy to listen, but "it's just rationalizing" is a dismissal with no value, pure and simple.

    And I just went back and reread the OP. I'm afraid I am not seeing how this "directly contradicts" what I said in the OP. Indeed, I'm not even seeing how the two are related. The OP was about what companies are likely to do with tax cuts. This is about economic indicators. So...
    When a business gets more money, they do not immediately think, "let's make more jobs."


    vs.

    Private payrolls grow by 234,000 in January, vs 185,000 expected: ADP/Moody's Analytics

    Private companies hired 234,000 jobs in January, well above expectations for 185,000, according to ADP and Moody's Analytics.

    Service-related industries led with 212,000 new jobs; manufacturing added 12,000 and construction 9,000.
    The report often differs significantly from the government's more closely watched nonfarm payrolls count, with ADP reporting growth of 242,000 in December vs. the Labor Department's 148,000.

  9. #57
    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Sparko View Post
    When a business gets more money, they do not immediately think, "let's make more jobs."


    vs.

    Private payrolls grow by 234,000 in January, vs 185,000 expected: ADP/Moody's Analytics

    Private companies hired 234,000 jobs in January, well above expectations for 185,000, according to ADP and Moody's Analytics.

    Service-related industries led with 212,000 new jobs; manufacturing added 12,000 and construction 9,000.
    The report often differs significantly from the government's more closely watched nonfarm payrolls count, with ADP reporting growth of 242,000 in December vs. the Labor Department's 148,000.
    OK, a couple of things. First, you are assuming that job growth as reported is a function of the tax cut. You have nothing here but correlation, which is not causation. You also have numbers that are not substantially different from any other month. We had months under Obama with 350K+ job growth, and there was no tax cut. I stand by my statement: companies do not take extra money and say, "let's add some positions." If they can justify a business expansion with the funds, they will add positions if and only if they cannot serve the growth by other means (efficiency, automation, etc.). Hiring is pretty much always the last choice.

    Second, Moody can report anything they wish, but the numbers can only be preliminary and projections. Sparko - the month isn't even done! Today is the last day! And I go by the official Bureau of Labor numbers, which is what I reported on in my post. Even if you add your Moody/ADP January numbers into the mix, Trump is still averaging below job growth in 2013-2016 by a significant amount. As for the Moody/ADP numbers, the Bureau numbers for Nov and Dec, as I noted, are preliminary numbers. They have not been finalized and should not be taken as such. If ADP is correct, they will be adjusted upward when they are finalized. If ADP is off, that will be reflected as well. I can rerun the numbers without the preliminary months if you wish, but I am certainly not going to include numbers for a month that is not even finished. Bureau numbers tend to run 2-3 months behind before they are finalized.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.

    -Martin Luther King

  10. #58
    Troll Magnet Sparko's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    OK, a couple of things. First, you are assuming that job growth as reported is a function of the tax cut. You have nothing here but correlation, which is not causation. You also have numbers that are not substantially different from any other month. We had months under Obama with 350K+ job growth, and there was no tax cut. I stand by my statement: companies do not take extra money and say, "let's add some positions." If they can justify a business expansion with the funds, they will add positions if and only if they cannot serve the growth by other means (efficiency, automation, etc.). Hiring is pretty much always the last choice.

    Second, Moody can report anything they wish, but the numbers can only be preliminary and projections. Sparko - the month isn't even done! Today is the last day! And I go by the official Bureau of Labor numbers, which is what I reported on in my post. Even if you add your Moody/ADP January numbers into the mix, Trump is still averaging below job growth in 2013-2016 by a significant amount. As for the Moody/ADP numbers, the Bureau numbers for Nov and Dec, as I noted, are preliminary numbers. They have not been finalized and should not be taken as such. If ADP is correct, they will be adjusted upward when they are finalized. If ADP is off, that will be reflected as well. I can rerun the numbers without the preliminary months if you wish, but I am certainly not going to include numbers for a month that is not even finished. Bureau numbers tend to run 2-3 months behind before they are finalized.
    sigh. Your OP was that Moody was predicting that businesses were NOT using the tax money to expand business and help employees and create jobs. Then they actually report the opposite. And you still can't just say "I was wrong"

    SMH.

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    Quote Originally Posted by carpedm9587 View Post
    Moody is apparently confirming to its customers that the Tax overhaul will have minimal impact on the economy because (as was predicted) the vast majority of businesses are prioritizing stock buy-backs, mergers and acquisitions, and paying down debt. (https://www.marketwatch.com/story/ta...ays-2018-01-25).
    ....
    “We do not expect a meaningful boost to business investment because U.S. nonfinancial companies will likely prioritize share buybacks, M&A and paying down existing debt,” said Moody’s analysts led by Rebecca Karnovitz. “Much of the tax cut for individuals will go to high earners, who are less likely to spend it on current consumption.”
    Prediction, not confirmation.

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    tWebber Teallaura's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    No. I won't keep the money. I do disagree with the structure of the tax cuts, their impact on the deficit (I don't believe this "the economy will pay for it"), and their disproportionately low impact on the low and middle income. But with the current administration in power, I will take the cuts and direct them to those who have been least helped by this tax cut, perhaps using some for the work we are doing in Haiti.
    So the cut does do some good.

    Having not so long ago been in the position where $25 makes a big difference, your argument is compelling but the other way. Those small gains will likely go into the economy (have you seen gas prices lately?) and they add up. If I remember Econ 101, increased demand eventually translates into more jobs.

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