Tax-Cut-Fueled Stock Buybacks Retard Emergence of Trump’s ‘Greatest’ Economy
By Bradley Keoun
President Donald Trump’s tax cuts have prompted corporate executives use the cash windfall to reward their own investors instead of building factories, buying new equipment or accelerating wage increases that might spur consumer spending and stimulate the U.S. economy.
Companies in the Standard & Poor’s 500 Index of large U.S. stocks are on pace to spend $2.5 trillion this year on shareholder dividends, stock buybacks or acquisitions, the Swiss bank UBS said Monday in a report. That would be a record, representing a $1 trillion jump over prior-year levels . . .
Economists are scrutinizing the latest data reports for early indications of whether Trump’s tax cuts are delivering the promised fillip to growth – the primary argument for the passing new legislation, given the expected loss of government revenue at a time when the national debt is above $20 trillion and growing . . .
Wayne Winegarden, a senior fellow in business and economics at the Pacific Research Institute, which advocates for free-market policies, says it’s too early to judge the effect of the tax cuts by looking at economic data. But he says the money put into investors’ hands from stock buybacks and dividends will eventually be reinvested into different companies where executives are ready to take advantage of opportunities or looking to expand.
“Everything is proceeding positively, but it’ll take time for these things to work out,” Winegarden said. “If you have the right policy environment that’s incenting opportunities, capital will be made available.”