Drudge Retort: The Other Side of the News
Wednesday, September 18, 2019

One vital sign of the American economy is pointing toward growth turning negative by the end of the year.

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Not seeing it in Snacks & Bevs but then Budweiser never laid off a single person in the Great Depression.

I remember that the Atlantic Shipping Index went south just before the depression, and stayed that way.

#1 | Posted by HeliumRat at 2019-09-17 06:09 PM | Reply

I've always heard that freight and transportation stocks are a bellwether of the near future economy. Makes sense.

#2 | Posted by goatman at 2019-09-17 06:17 PM | Reply

Businesses slow down between October and January?

sounds like the end of the world.

#3 | Posted by SheepleSchism at 2019-09-17 08:47 PM | Reply

@#2 ... I've always heard that freight and transportation stocks are a bellwether of the near future economy. Makes sense. ...

Freight and transportation seem to be more of a leading indicator of the state of economy. It seems to be increasing in its pointing towards an economic contraction.

I've also noted that consumer spending still is going gangbusters, merchandise is flying off the shelves.

Then there are op-eds like this one:

A Strong U.S. Consumer Is a Lagging Indicator
www.bloomberg.com

Looking through all this, and taking into account that, whiles interest rates are at historical lows, President Trump wants them to be lowered even more.

Just what is going on here?

Is the economy as robust as Pres Trump tweets it is?

Or are we on the verge of something resembling stagflation?

#4 | Posted by LampLighter at 2019-09-17 11:29 PM | Reply

Businesses slow down between October and January?

sounds like the end of the world.
#3 | POSTED BY SHEEPLESCHISM

Nope, just another lie from our idiot in chief and his economically illiterate cultists.

#5 | Posted by jpw at 2019-09-18 09:12 AM | Reply

Of course it's not as robust as Trump and his sycophants claim.

They juiced it for a quick "win" to post artificially high numbers and are now struggling to contain the inevitable outcome.

Repubs are proving yet again they have no clue what they're doing beyond raiding the treasury for their donors.

And their supporters prove once again they're idiots for going along with it for the third time. Fourth maybe?

#6 | Posted by jpw at 2019-09-18 09:14 AM | Reply

Tax cuts for the rich never improve an economy based on consumerism. Didn't work when Reagan did it, didn't work when Bush did it, it isn't working now that Trump has done it. The only way to boost a consumer driven economy is for the average consumer to have more money in their pockets. The only way that will happen is when the rich pay more taxes when they don't increase the pay of workers. Avoiding taxes is the key to growth. It spurs factory building, hiring, and production. If the very wealthy owes little of no taxes then there is no incentive to invest in factories or workers.

#7 | Posted by danni at 2019-09-18 10:05 AM | Reply | Newsworthy 3

#7 | POSTED BY DANNI FLAG: Failed Econ 101

#8 | Posted by JeffJ at 2019-09-18 10:14 AM | Reply

"Failed Econ 101"

You failed Recent History of the United States. The biggest growth in the history of the United States was accomplished with marginal tax rates of 90% later lowered to 70%. Jeff didn't just fail Recent History of the United States he also failed Logic 101.

#9 | Posted by danni at 2019-09-18 10:20 AM | Reply | Funny: 1 | Newsworthy 1

You failed Recent History of the United States. The biggest growth in the history of the United States was accomplished with marginal tax rates of 90% later lowered to 70%. Jeff didn't just fail Recent History of the United States he also failed Logic 101.

#9 | POSTED BY DANNI

Actually, biggest private sector economic growth occurred in the 2 decades leading up to the Depression.

Also, you confuse marginal rates with effective rates (what people actually pay). Further, you ignore that post WWII manufacturing overseas was crushed thus creating an inflated demand for US exports, which is what really drove economic growth - that whole supply/demand thing that gets taught in econ classes.

What I was specifically referring to in your post was this:

Avoiding taxes is the key to growth. It spurs factory building, hiring, and production.

It does spur corporate reinvestment but it does NOT spur growth. Profit motive is what spurs growth and higher taxes ------- profits.

#10 | Posted by JeffJ at 2019-09-18 11:07 AM | Reply

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"Failed Econ 101"

You failed Recent History of the United States. The biggest growth in the history of the United States was accomplished with marginal tax rates of 90% later lowered to 70%. Jeff didn't just fail Recent History of the United States he also failed Logic 101.

#9 | Posted by danni

LOL.

"The top 1 percent of income earners paid an average effective income tax rate of 16.9 percent in the 1950s"

checkyourfact.com

#11 | Posted by Daniel at 2019-09-18 11:18 AM | Reply

"It does spur corporate reinvestment but it does NOT spur growth. "

That's like saying building highways doesn't spur growth, per se.

" higher taxes ------- profits."

Do lower taxes ------ reinvestment?

#12 | Posted by Danforth at 2019-09-18 11:18 AM | Reply

Reinvestment - probably
Growth - absolutely not. Lower taxes spur growth. It's the risk/reward paradigm.

#13 | Posted by JeffJ at 2019-09-18 11:25 AM | Reply

Reinvestment - probably
Growth - absolutely not. Lower taxes spur growth. It's the risk/reward paradigm.

Posted by JeffJ at 2019-09-18 11:25 AM | Reply

No it doesn't lower taxes means a company doesn't have to spend money to avoid paying taxes.They can stash it away without worry. If you raise taxes on the rich they are more likely to spend that money on their company than to give it to Uncle Sam to reduce their tax liability.

#14 | Posted by LauraMohr at 2019-09-18 11:33 AM | Reply

Not seeing it in Snacks & Bevs

Well, if your singular experience in one industry says so, i better disregard all rail, trucking and air freight volume nationwide. Thanks for correcting the record!

#15 | Posted by JOE at 2019-09-18 11:40 AM | Reply

"LOL.
"The top 1 percent of income earners paid an average effective income tax rate of 16.9 percent in the 1950s"

You prove my point. They used business expenses to lower their taxes.

#16 | Posted by danni at 2019-09-18 11:42 AM | Reply | Newsworthy 2

"Reinvestment - probably"

Sorry, no "probably" when the macro dials turn. If you don't understand that's "definitely", you don't understand how the equation changed.

"Growth - absolutely not. Lower taxes spur growth."

No they don't; not in and of themselves.

"it's the risk/reward paradigm."

Nonsense. it's the equation, and how it changed to disincentivize reinvestment, and spur taking profits OUT of the business.

Just to see if you're tracking: did the new tax code reward putting money back into the business, or taking money out of the business?

#17 | Posted by Danforth at 2019-09-18 11:46 AM | Reply

Profit motive is what spurs growth and higher taxes ------- profits.

#10 | POSTED BY JEFFJ

Have you been asleep the past 20 years?

#18 | Posted by jpw at 2019-09-18 12:07 PM | Reply | Newsworthy 2

Didn't work when Reagan did it, didn't work when Bush did it, it isn't working now that Trump has done it.

Reagans growth was the benefit of cheap oil. Oil was $40 a barrel in 1980 and by dropped to the teens and it stayed there until the 2000's.

People love to point at the growth under Reagan and say it was his tax cuts, but he also implemented very large middle class tax hikes during his time in office. Oil is in everything. Plastics, shipping, roads, cars, food. That was a much more important factor in the myth of his legacy.

Conversely saying that 90% income tax rates were the driving factor of the economy of the 1950s and 1960s overlook that most of Europe and Asia's manufacturing base had been destroyed during WWII. Take steel production. The US owned 75% of the worlds steel production at the end of WWII. Europe and Asia rebuilt using modern techniques which lowered cost while American steel companies made excuses for why they could not switch. In the end innovation killed them while they begged for protectionist trade policies.

#19 | Posted by Nixon at 2019-09-18 12:56 PM | Reply | Newsworthy 1

Europe and Asia rebuilt using modern techniques which lowered cost while American steel companies made excuses for why they could not switch. In the end innovation killed them while they begged for protectionist trade policies.

^^^^^
THIS!

#20 | Posted by WhoDaMan at 2019-09-18 10:41 PM | Reply

I don't have any inside info, but I think our economy will be fine through re-election season, and if anything happens, it'll be 2021

#21 | Posted by GOnoles92 at 2019-09-19 07:56 AM | Reply

So, the panama canal expansion finished did not have any effect on truck and rail freight? You libs always see the sky falling.

#22 | Posted by Sniper at 2019-09-19 09:21 AM | Reply

Again, the media reports false flags just so they can try to cause a recession so they can validate their hate against Trump. While some industries are falling, some are prospering. Yet people against Trump refuse to accept this reality because they want America to fail ONLY to justify their hate-filled hearts. Can't wait for it to be the Rep's turn to be this ignorant.

#23 | Posted by humtake at 2019-09-19 11:40 AM | Reply

#23 | Posted by humtake

Trump's ill managed 'trade war' (with our allies too) is hurting America and Americans. Just like the tax credits they enacted for corporations to move factories to China. The great negotiator is failing at it. China is laughing at him behind his back.

And before you go all 'Clinton blah blah blah NAFTA' on us, as is typical around here;

George HW Bush negotiated and signed NAFTA. Clinton only signed Congress' ratification of NAFTA shortly after he took office. NAFTA, which had nothing whatsoever to do with American businesses getting tax credits to move factories to China, which isn't in North America.

#24 | Posted by AMERICANUNITY at 2019-09-19 11:45 AM | Reply

People will only run up their credit card bills so far before consumption has to slow again.

#25 | Posted by Whatsleft at 2019-09-19 03:07 PM | Reply

An average decrease of 5 percent for US rail traffic from last year = recession of Obama's economy!

#26 | Posted by mutant at 2019-09-19 04:14 PM | Reply | Newsworthy 1

www.aar.org

#27 | Posted by mutant at 2019-09-19 04:15 PM | Reply

Avoiding taxes is the key to growth. It spurs factory building, hiring, and production.
It does spur corporate reinvestment but it does NOT spur growth. Profit motive is what spurs growth and higher taxes ------- profits.

#10 | POSTED BY JEFFJ

Reinvestment - probably
Growth - absolutely not. Lower taxes spur growth. It's the risk/reward paradigm.

#13 | POSTED BY JEFFJ

Jeff... you're talking yourself in circles here. I actually kinda agreed with you when I read your first post (really depends on how you define "growth"), but then you posted the second one and destroyed it.

Taxes, higher OR lower, can spur investment. Higher taxes (depending on how they are structured) penalize withdrawing money from the company, so any investment outside the company is less rewarding in comparison to re-investing in the company. Hence, it drives investment that is internal to the company. Lower taxes increase the potential return on your money, so stimulate investment (increase the reward compared to the risk, so more money will be invested until the risk/reward is brought back to normal).

But, whether investment leads to growth is a different question. Ultimately, all the investment in the world will not do you any good if there is not an increase in demand for your products (well... you could invest in efficiency, thereby decreasing your costs, but that does not stimulate growth unless you also decrease price to increase demand, but that is an edge case). It doesn't matter HOW MANY widgets you can make if no one wants to buy them.

So, ultimately Danni was the most correct with her statement "The only way to boost a consumer driven economy is for the average consumer to have more money in their pockets." Consumers having disposable income to be able to BUY your products is what drives growth (and the edge case above conforms... if you decrease the price of your product then consumers essentially have "more" money to buy it with). Tax policy can push it a little bit one way or the other on the margins, but it is really insignificant compared to the effect of consumers' disposable income.

Sorry Jeff... looks like you need to go back to Econ 101 as well.

#28 | Posted by gtbritishskull at 2019-09-20 10:22 AM | Reply

BTW... this is why I am in favor of liberal tax policies. Not because I think the tax structure incentives to invest cause any significant growth. But because progressive taxes redistribute money which helps to put more money in the pockets of the average American, which increases disposable income and DOES increase growth. My philosophy for growing the economy is to tax the rich and have them pay for government so you can tax the average American LESS, which spurs growth. That is the way to get the most out of the economy. And while the "rich" may take home less as a percentage of their income, a rising tide raises all boats. If the economy is booming then they should make more money. Probably still would be less than they make under the current system (I am not going to make a mistake similar to the Republicans' idiotic "the tax cuts will pay for themselves") but it will reduce the effect of it some.

#29 | Posted by gtbritishskull at 2019-09-20 10:28 AM | Reply

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