The Trump Tax Cut Driving Strong Business Investment
- Shipments of core capital goods rose by 0.9% last month after an upwardly revised 0.9% gainer in June.
- The US economy grows 4.6% year-on-year in the third quarter after government data on the sale and cost of new homes, the GDPNow forecast model of the Atlanta Federal Reserve Friday.
- New orders for major US-produced capital goods rose stronger than expected in July and the growth of shipments remained good, indicating that business investment started the Q-3 with a strong note.
TheCommerce Department said on Friday orders for non-defensive capital goods with the exception of aircraft, a well-viewed proxy for business spending plans, rose 1.4% last month after an upward revision of 0.9% in June.
Operating expenses for equipment are supported by the $ 1.5-T income tax package from The Trump Administration, which entered into force in January.
However, there is some concern that trade strains between the United States and its major trading partners, including China, Canada, Mexico and the European Union, can compensate for the tax incentive, but that is not very likely.
Economists surveyed by Reuters predicted that orders for core capital goods would increase by 0.4% in July after a previously reported profitability of 0.2% in June. Orders for core capital goods increased by 7.2% on Y basis.
Shipments of core capital goods rose by 0.9% last month after an upwardly revised 0.9% gainer in June.
Shipments of core capital goods are used to calculate equipment expenditures in the government's GDP (gross domestic product) measurement, so the higher estimate for shipments in June could contribute to an upward revision of overall economic growth in Q-2.
Capital expenditures accounted for around 25% of economic growth during the period April-June, when the economy grew rapidly in nearly 4 years, as consumers increased their spending and farmers transported soy shipments to China to defeat retaliation rights before they came into effect. were in early July.
The United States has so far imposed import duties on Chinese goods of $ 50%, resulting in retaliation rights from Beijing.
General orders for durable goods, items ranging from toasters to aircraft that are intended to last 3 years or longer, fell 1.7% in July when the demand for civil aircraft dropped.
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