November 22, 2019


“I would expect capital spending to really take off if the tax bill passes.” – CEA Chair Kevin Hassett, Oct. 17, 2017 [Washington Post]

Source: BEA, National Accounts (NIPA): Section 1, Table 1.1.1, Line 9: “Percent Change From Preceding Period In Real Gross Domestic Product: Gross private domestic investment: Fixed investment: Nonresidential.” – reqid=19&step=2&isuri=1&1921=survey

Supporters claimed the Trump-GOP tax law—specifically, the big corporate tax cut—would lead to a business investment boom. Instead, after just one-quarter of modest growth in 2018 (rising from 8.4% at the end of 2017 to 8.8%), capital investment has declined overall, falling into negative territory in the last three quarters of 2019.  

Sources: S&P Dow Jones Indices, p. 3. For most recent quarters:

Corporate stock buybacks exploded in the year following enactment of the Trump-GOP tax law, as corporations showered their tax-cut savings on top executives and other wealthy shareholders. Corporations bought back a record $800 billion-plus of their own shares in 2018. That represented an increase of more than 50% over the $519 billion in stock buybacks in 2017. Stock buybacks were on track to top $720 billion in 2019.