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The large bulk of US firms say they did not alter their hiring or investment plans due to the massive tax cuts in December, according to a business survey released Monday.
But neither have the companies changed their plans due to the confrontation with numerous US trade partners, especially China, according to the quarterly survey from the National Association for Business Economics.
President Donald Trump’s economic team has repeatedly claimed the December tax cuts will boost economic growth and wages, and thereby soften the blow to the budget deficit, which has so far ballooned due to the tax cuts.
Of the 116 firms surveyed, 81 percent said they had not changed plans due to the tax cuts – an increase from previous surveys, NABE said.
And asked about tariffs, quotas and the threats to withdraw from free trade agreements, 77 percent said they had not changed their hiring, investment or pricing plans but that was up from the July survey – the last time the question was asked.
The Federal Reserve had noted rising concern about the trade conflicts and the potential to impact or delay investment and hiring decisions.
The NABE noted that more manufacturing firms made changes to react to various trade disputes, including 46 percent raising prices, and 38 percent delaying investments, the survey showed.
Likewise, manufacturers were more affected by the tax cuts.
‘The 2017 Tax Cuts and Jobs Act has not broadly impacted hiring and investment plans at panelists’ firms,’ NABE Business Conditions Survey Chair Sara Rutledge said.
But she noted that ‘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.’