The Federal Reserve Bank of Atlanta published the results of an ongoing national survey they conducted along with Stanford University and the University of Chicago. They have been asking business executives about what they were planning on investing in after receiving those big payoffs tax cuts from the Republican Party. The first results of the survey came before the tax cuts were official.
At the time, we (and perhaps others) were a little surprised to find that roughly two-thirds of respondents indicated that tax reform hasn't enticed them into changing their investment plans for 2018. Our initial interpretation was that the lack of an investment response by firms made it unlikely that we'd see a sharp acceleration in output growth in 2018.
Another interpretation of those results might be that firms were unwilling to speculate on how they'd respond to legislation that was not yet set in stone. Now that the ink has been dry on the bill for a while, we decided to ask again.
I’m sure things will have picked up now, with the certainty that all of that sweet money from social safety nets has been siphoned into their pockets. In November, before the tax cut was passed, business executives said “meh.” Last month, when asked business executives said … ”meh.”
Hold your horses! Asking about this year’s 2018 expenditures is not going to give you the right read. Most of the guys (and yes, most of them are probably guys) have likely made these decisions already. Let’s ask about 2019!
The good news is that larger firms did seem to say they would increase their expenditures more readily than smaller ones. Part of that is simply them saying that will increase their capital expenditures at all—more specifically by less than 10 percent. For example, that could mean they plan on buying a new computer and redo the office of some guy named Larry—and Larry might even be the business executive asked in this survey.