So far, it doesn't look like the GOP tax law has prompted the investment boom Republicans promised

So far, it doesn't look like the GOP tax law has prompted the investment boom Republicans promised

paul ryan donald trump kevin brady

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House Speaker Paul Ryan, President Donald Trump, and Rep. Kevin Brady.

  • Republicans promised that the Tax Cuts and Jobs Act would lead to a boom in US business investment.
  • A new survey from the National Association for Business Economics, or NABE, showed that few companies are increasing investment or hiring due to the tax law.
  • The survey also matches the most recent data on capital expenditures that shows no meaningful boost.
  • On the other hand, few firms reported negative outcomes due to President Donald Trump's tariff policies.

One of the cornerstone Republican arguments during the debate over the tax reform bill was that the business tax cuts would lead to an investment boom in the US.

"These massive tax cuts will be rocket fuel, rocket fuel for the American economy," President Donald Trump promised in November.

The GOP's argument in the run up to the Tax Cuts and Jobs Act's passage was that businesses would invest the cash from the smaller tax bill into new equipment, factories, and hiring. But according to a new survey by the National Association for Business Economics, the TCJA isn't causing an investment boom.

From the survey:


  • "81% of respondents indicate that the 2017 Tax Cuts and Jobs Act (TCJA) has not caused their firms to change hiring or investment plans."
  • "This share is an increase from the roughly two-thirds of panelists reporting no changes as a result of the TCJA in the previous two surveys."

A somewhat higher number of goods-producing firms have reported a boost from the TCJA, said Sara Rutledge, NABE's Business Conditions Survey Chair.

"The 2017 Tax Cuts and Jobs Act has not broadly impacted hiring and investment plans at panelists' firms, although panelists from the goods-producing sector do report some incidence of increased investments, and a shift toward hiring and investments from abroad to the US," Rutledge said.

Only 6% of businesses in the service sector, which makes up the largest chunk of the US economy and employment in the country, reported changes in investments and hiring due to the GOP tax law.

The lack of a capex boom is also in line with the most recent hard data from last week. While Friday's GDP report showed the economy growing at a solid pace, nonresidential fixed investment grew at the slowest pace in almost two years. Additionally, core durable goods orders also fell for the second straight month, according to the report released Thursday.

Most businesses aren't responding yet to the trade war

While there is growing anecdotal evidence from Federal Reserve surveys and company earnings calls that Trump's trade war is weighing on business decisions, most respondents to the NABE survey said it so far hasn't affected their plans.


Overall, 77% of NABE respondents reported no changes to hiring and investment plans due to trade policy. But again, the changes were more acutely felt by goods-producing firms.

"Goods-producing firms are more likely to have made changes, with 46% raising prices and 38% delaying investments, higher percentages than those in the July survey," the release said.

The latest wave of Trump's tariffs on roughly $250 billion worth of Chinese goods was imposed on September 24.