Hello, I am trying to do a critical analysis of the article below using economic

Question

Hello, I am trying to do a critical analysis of the article below using economic or microeconomic concepts and tools. Please can you read the article and tell me the key ideas of the article that can be helpful and the concepts ( or themes) on microeconomic that I can use to do the critical analysis of those ideas? Thanks

Tax Revamp Drives Corporate CEOs’ Economic Outlook to 15-Year High

CEOs expect to increase spending and hiring, survey says, but tariffs are worrisome

By

Sarah Chaney

Sarah Chaney

The Wall Street Journal

Chief executives of America’s largest companies raised their outlook for spending, hiring and sales to the highest level in 15 years in the first quarter after the passage of the U.S. tax overhaul.

While the Business Roundtable CEO Economic Outlook Index reached its highest level in the survey’s history, the group’s leaders warned that recent U.S. trade policy could imperil the gains. The index is a composite of companies’ plans for capital spending and hiring, as well as projections for sales, over the next six months.

Small-business owners, in a separate report Tuesday, reported their highest optimism in 35 years in February.

The Business Roundtable survey is the first the group has conducted since the U.S. tax changes were adopted in December. The law included many provisions the Business Roundtable supported, such as a much lower corporate tax rate and lighter taxes on many U.S. companies’ foreign earnings.

James Dimon, chairman of the Business Roundtable and CEO of JPMorgan Chase & Co., said the survey results are likely to translate into more jobs for Americans.

Click For Sound

Under the new tax law approved by Congress, the standard deduction is going up and the personal exemption is going away. But these changes won't be visible until your 2019 returns. WSJ's Richard Rubin explains the recipe behind the changes that are coming to your tax bill.

“The historic tax-reform law is already prompting more investment, jobs, high wages and more benefits for workers all here in the United States of America,” Mr. Dimon said.

Executives also boosted their projection for growth this year in gross domestic product, predicting a 2.8% rate, above their earlier estimate of 2.5%.

The survey of 137 chief executives at large U.S. businesses was conducted between Feb. 7 and 26.

Joshua Bolten, Business Roundtable president and CEO, said the survey was conducted before the Trump administration’s announcement of tariffs on imports of steel and aluminum, which conflict with the Business Roundtable’s position in favor of negotiations that would lower tariffs around the world. Mr. Bolten served as budget director and chief of staff in the administration of President George W. Bush.

“Missteps on important elements of U.S. trade policy will undermine great economic progress that’s been realized so far from tax reform and regulatory relief, perhaps even reverse it,” Mr. Bolten said.

In the first quarter, the share of firms planning to increase staff over the next six months rose to 61%, above the 43% of the fourth quarter, while the share of companies planning to ramp up capital investment increased to 68% from 49%. The share expecting sales to increase shot up to 93% this quarter from 76%.

Small-business owners also responded positively to the tax changes, showing the most optimism in more than three decades, according to another report.

The Small Business Optimism Index rose in February to 107.6, the National Federation of Independent Business said. It was the second-highest level in the measure’s 45 years, second only to a reading of 180 in 1983.

“Small-business owners are telling us loud and clear that they’re optimistic, ready to hire and prepared to raise wages,” NFIB chief economist Bill Dunkelberg said.

—Cara Lombardo contributed to this article.

Write to Sarah Chaney at sarah.chaney@wsj.com

Explanation / Answer

I will help you with some key pointers around macro and micro economic indicators which you can use to build upon your answers.

A micro economic indicator is one which will give you more insights into an individual's behaviour. For example, are you able to deduce that the average spending on tomatoes will go down by individuals?

A macro economic indicator is one which will give you an idea of how the economics are flowing at a country level or at a regional level. For example, ar eyou able to predict that the GDP growth will go up next quarter?

Now, let us get to the key points/indicators in this article, and you can build on these points:

Lower corporate tax rates: The article mentions that the government is planning for a lot of tax rebates, such as lower corporate taxes on companies. This directly translates into increased investments and, consequently, more jobs. More investments means more factories/facilities, which would result in a requirement for talent. This automatically creates a pull for creation of new jobs. This is a macro economic indicator

More jobs means more tax collections: If the employment goes up, then the spending power of individuals goes up. This means they will start spending more, and each purchase is taxed. This means more tax collections for the government, which will result in a reduced fiscal deficit

There would be a rapid rise in the employment rate as small businesses are optimistic about the move. It is small businesses where a lot of part-timers are employed, and these, when added up at a country level, account for a sizeable portion of the working population

Higher GDP estimates also means that the country will be manufacturing more goods & services. This would mean, at a macro economic level, more investments and more manpower. This again translates to better tax collection results, reduced unemployment, and more industry optimism

Another macro economic indicator is that most of the firms have shown optimism in increase in sales, increased hiring, and increased investments. This is a clear indicator that the GDP is projected to increase at a faster rate that what it is currently growing at.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.