While campaigning for president of the United States in 2016, Donald Trump promised massive tax cuts. He has delivered, initiating a $1.5 billion tax reform. The American economy is currently soaring thanks to the president’s fiscal policies — primarily the tax cuts — but the boom will not last forever.
According to Edmund Phelps, a Nobel Prize-winning economist and professor at Columbia University, the boom will end in approximately two years.
“We’re in a boom, but all booms come to an end. This high level of output and employment cannot be sustained,” he told CNBC.
The economist explained that Trump’s corporate tax cuts have helped the American economy, since they’ve caused higher corporate investment, but these investments will last for another two years, and then the boom will come to an end.
Corporate investments, according to Edmund Phelps, will not continue much longer, and the United States will soon return to a “more normal” level of employment.
“I would be surprised if the elevated level of investment continues much longer. Maybe another year, maximum two years. Then, I think we’re going to subside to a more normal level of employment and unemployment.”
According to CNBC, the American economy is estimated to grow by 2.1 percent this year, which is down from an earlier forecast of 2.3 percent. Likewise, the Federal Reserve has warned that the U.S. economy appears to be growing at a slower pace at the moment. Unlike Phelps, other economists have argued that the United States could in fact be in recession by the middle of 2020.
Trump's tax cuts will boost the US for two more years at most, says Nobel Prize winner https://t.co/FAGn3wXNw3— CNBC (@CNBC) March 24, 2019
Trump often takes to Twitter to boast about his administration’s accomplishments. Most often, the president praises his own fiscal policies, arguing that they have breathed new life into the American economy. In a recent tweet, Trump quoted CNN, which released a poll showing that the economy is in best shape since 2001, asking, “WOW, is CNN becoming a believer?”
The president’s tax cuts may have boosted the economy and enriched corporations, but they have not done much for ordinary Americans, according to Bloomberg. The publication wrote in December of 2018 that corporations and wealthy Americans are benefiting from the president’s tax cuts, while middle and working class folks are not.
Similarly, in late 2018, MarketWatch observed that Donald Trump’s tax corporate tax cuts are not trickling down on the working class, concluding that the president’s signature The Tax Cuts and Jobs Act is, in fact, harming American workers and the economy as a whole.
“Real wage growth has been largely nonexistent for the average worker since the tax bill passed,” the publication noted.