Economy

Feds Collect Record Taxes in First Month Under Tax Cut; Run Surplus in January

The federal government this January ran a surplus while collecting record total tax revenues for that month of the year, according to the Monthly Treasury Statement released today. January was the first month under the new tax law that President Donald Trump signed in December. During January, the Treasury collected approximately $361,038,000,000 in total tax revenues and spent a total of approximately $311,802,000,000 to run a surplus of approximately $49,236,000,000. Despite the monthly surplus of $49,236,000,000, the federal government is still running a deficit of approximately $175,718,000,000 for fiscal year 2018. That is because the government entered the month with a deficit of approximately $224,955,000,000. The $361,038,000,000 in total taxes the Treasury collected this January was $11,747,870,000 more than the $349,290,130,000 that the Treasury collected in January of last year (in December 2017 dollars, adjusted using the Bureau of Labor Statistics inflation calculator). The Treasury not only collected record taxes in the month of January itself, but has now collected record tax revenues for the first four months of a fiscal year (October through January). So far in fiscal 2018, the federal government has collected a record $1,130,550,000,000 in total taxes. However, despite the record tax collections so far this fiscal year, and despite the one-month surplus in January, the federal government is still running a cumulative deficit in this fiscal year of $175,718,000,000. That is because while the Treasury was collecting its record $1,130,550,000,000 in taxes from October through January, it was spending $1,306,268,000,000. The levels of federal taxes and federal spending fluctuate from month to month, and it is not unusual—but not always the case—for the federal government to run a surplus in January. Over the last twenty fiscal years, going back to 1999, the federal government has run surpluses in the month of January 13 times and deficits 7 times.

Hostess employees get a year’s worth of free Twinkies and Ding Dongs as a bonus

On January 31, Hostess Brands Inc. announced that not only would their employees receive monetary bonuses this year, but that they would also get a year’s worth of free baked goods! After enacting tax legislation, Hostess will be rewarding its 1,036 bakery and corporate employees bonuses of $750 in cash, a 401(k) contribution of $500, and a year’s worth of free product. “The recent tax reform changes have given us the opportunity to review our benefit and compensation structure with an eye toward further investing in our workforce — our extraordinary team of employees who have and continue to help make Hostess so successful,” said executive chairman C. Dean Metropoulos in a press release by the baked goods brand. “As we have done in the past, the company’s management and board take great pleasure in sharing the company’s success with our employees.” No, employees will not have to fill their cars with a year’s worth of Twinkies and Ding Dongs. On a weekly basis, a representative from each bakery location will choose a “product of the week” for the bakery and all eligible employees will be able to take home one multi-pack of the chosen item every week for an entire year.

🙂

U.S. Service Sector Hits 13-Year High

The U.S. service sector picked up momentum in January, reversing a slowdown at the end of 2017. The Institute for Supply Management on Monday said its nonmanufacturing index rose by more than four points to 59.9 in January, a far stronger reading than the 56.6 expected by economists. In December, the index slipped to 55.9. January’s figure is the highest in 13 years. A reading above 50 indicates that non-manufacturing business is expanding, while a reading below signals contraction. The survey tracks the performance of service-oriented companies, such as banks and restaurants, as well as real estate and construction. Fifteen of the 18 business sectors tracked by ISM experienced growth in January. ISM’s gauge of non-manufacturing employment rose to an all-time high of 61.6, up from 56.3 in December. Its index of new orders surged 8.2 percentage points to 62.7. The survey shows that the economy is off to a strong start in 2018.

Indeed!!   🙂

Atlanta Fed Sees GDP Rocketing to 5.4% in First Quarter

The American economy is on track to grow at a 5.4 percent annualized rate in the first quarter of this year, the Atlanta Federal Reserve’s GDPNow forecast model showed on Monday. The regional Fed’s forecast rose from last week’s 4.2 percent growth following a report on manufacturing that showed more expansion than expected. The forecast of real consumer spending growth rose from 3.1 percent to 4.0 percent, while the forecast of investment growth soared from 5.2 percent to 9.2 percent. This is an early reading, based on just one-months data. Even the most optimistic economists do not expect the economy to expand at that rate in the first quarter. Both the Atlanta Fed’s GDPNow and the New York Fed’s Nowcast had readings for the fourth quarter of 2017 that were substantially higher than the official initial estimate, which came in at a 2.6 percent annual growth rate.

Dow ends January with a rally, extends winning streak

Wall Street moved higher Wednesday, capping a strong run in January and clinching the Dow’s best winning streak since 1959. The Dow Jones Industrial Average jumped 72 points to 26,149. The S&P 500 advanced 1.4 points to 2,823. The Nasdaq Composite was up 9 points at 7,411. Despite a pullback to start the week, the Dow and S&P 500 completed their best January performances since 2016. The indexes also posted their 10th consecutive monthly gains—the strongest run in nearly 60 years. The Nasdaq has seven straight monthly gains to its credit. “Equities continue to drift upward, achieving returns in the first four weeks of the year that are often typical for an entire year,” U.S. Bank Wealth Management chief equity strategist Terry Sandven wrote in a note to clients this week. “While year-to-date performance is superb, the data still seems supportive of higher stock prices.” Stocks pulled back slightly later in Wednesday’s session after the Federal Reserve signaled a possible interest rate hike in March. The central bank also raised its inflation forecast, encouraged by low unemployment and stronger household spending. Wednesday marked the end of the final two-day policy meeting Opens a New Window. under Chair Janet Yellen, who will be replaced by Jerome Powell in February. The yield on the benchmark 10-year Treasury bond dipped slightly to 2.722% from 2.725%. Yields fall as bond prices rise. West Texas Intermediate crude oil rose 23 cents, or 0.4%, to $64.73 a barrel. AT&T (T) shares jumped in after-hours trading, as the telecommunications giant beat Wall Street’s estimates for fourth-quarter earnings. Microsoft (MSFT) and Facebook (FB) also reported better earnings than expected.

More great news!!    🙂

Dow pops 140 points, closes at record after Caterpillar and 3M earnings

The Dow Jones industrial average closed at a record on Thursday on the back of stronger-than-expected quarterly results from Caterpillar and 3M. The 30-stock index gained 140.67 points to close at 26,392.79. The Dow rose as much as 206 points but came off its highs after President Donald Trump told CNBC the dollar will get “stronger and stronger” under his leadership. The dollar index reversed losses and traded higher by 0.1 percent. The S&P 500 pared most of its gains and closed 0.1 percent higher at 2,839.25, a record. The Nasdaq composite gave up its gains and closed 0.1 percent lower at 7,411.16. Earlier, the S&P 500 and Nasdaq followed the Dow higher as a strong earnings season rolled on. “The numbers companies are releasing, along with the upbeat views from executives, is helping analysts lift their estimates and that’s helping stocks advance,” said Mark Luschini, chief investment strategist at Janney. “You [also] have strong U.S. and overseas economic growth, and that is supportive for stocks.” Shares of Caterpillar rose as much as 2.8 percent before finishing 0.6 percent higher, while 3M gained 1.9 percent. Celgene and McCormick also reported better-than-forecast quarterly earnings and sales. “This is going to be earnings-driven for the next couple of weeks,” said Tim Dreiling, regional investment director at U.S. Bank Wealth Management. “Thus far, it’s been terrific news.”

Terrific indeed!!  To read the rest of this article, click on the text above.    🙂

IMF: Trump Tax Reform Will Accelerate Growth in U.S. and Around the World

The Trump administration’s tax reforms will accelerate global economic growth, according to the latest forecast of the International Monetary Fund (IMF). Total economic output for the world will grow 3.9 percent in 2018 and 2019, after adjusting for inflation. That would be the strongest year for global growth since 2011 and represents an upward revision of 0.2 percent since the IMF’s forecast in October. When the IMF released its Global Economic Outlook in October, it assumed that U.S. tax policies would remain unchanged. In other words, it assumed Republican efforts to pass tax reform would fail. The changes to the U.S. tax code are expected to be responsible for “about half” of the upward revision, the IMF said. Much of that will arise from lower corporate income tax rates. The IMF estimates that lower rates will lead to an acceleration of business investment. As well, a larger federal budget deficit will stimulate the economy and boost U.S. growth, according to the IMF. The boost to U.S. growth will be significant. In the IMF’s previous forecast, it saw the U.S. economy expanding by 2.3 percent in 2018 and 1.9 percent in 2019. Now those figures have been revised up to 2.7 percent in 2018 and 2.5 percent in 2019. A stronger U.S. economy will also boost the economies of America’s trading partners, especially Mexico and Canada. According to the IMF, Mexico’s economy will experience an additional 0.4 percent growth this year and 0.7 percent growth next year, thanks to the changes in U.S. taxes. Canada’s growth will be 0.2 percent higher this year and 0.3 percent higher next year. The IMF says that the economic growth benefits of the tax overhaul will fade after 2022, largely because many of the tax cuts are scheduled to expire. If those tax cuts are extended or made permanent, however, that could extend the period of accelerated growth.

More great news in this Trump economy!!    🙂