Weekly Economic Snapshot - 8/4 - 8/7
Economic Facts for This Week
- Household costs are rising faster than wages for many Americans, making it more difficult to make ends meet each month.
- A new study refutes Republicans’ claim that Medicaid expansion worsened the opioid crisis. The study found no increase in the rate of opioid prescription in expansion states, but did find an increase in prescriptions for one type of treatment for opioid use disorders.
- Corporate profits increased by 7.7 percent in Q2 2018 from the year prior, boosted by the Republican tax cuts.
- About 40 percent of American families struggled to meet a basic need expense in 2017, according to a new survey. This includes expenses for food, housing, health care, and utilities.
- The aging population is not behind stagnant wage growth, as some have claimed. This suggests that more structural problems are to blame.
Chart of the Week
Growth in Gross Domestic Product (GDP) is often held up as the primary measure for the health of the economy. But with widening income gaps, it is increasingly less representative of what most American households are experiencing. For example, between 2003 and 2005, real GDP growth was 3 percent or greater each year. But during that span, average income for half of Americans fell. To better measure what households are actually experiencing, Senator Martin Heinrich, JEC Ranking Member, joined Democratic Leader Chuck Schumer to introduce a bill that would require the Bureau of Economic Analysis to report on how income is growing across the economic ladder.
Tracking Trump’s $4k Promise
During the tax cut debate, the White House claimed that the average American household would see an income increase of $4,000 a year because of the tax cuts. Below are some indicators looking at whether or not Republicans are living up to their promise:
- Stock buybacks are at record highs, with public companies announcing more than $750 billion in stock buybacks so far this year. Goldman Sachs projects buybacks could soar to $1 trillion by the end of 2018.
- Average weekly wages for production and nonsupervisory workers are just 2 percent higher than they were before the new tax law, before adjusting for inflation.
- The average hourly wage for production and nonsupervisory workers—our best measure of the median workers’ take home pay—was lower in July 2018 than it was in July 2017, after adjusting for inflation.
ICYMI
- New research on patent boxes, which provide tax subsidies for innovations patented within a country’s borders, found no evidence that they increase innovation.
- Students who retake the SAT to improve their scores are more likely to enroll in college, but low-income and underrepresented minority students are less likely to retake the test.
- Responding to a request from JEC member Congresswoman Carolyn Maloney, GAO issued a report finding that women often pay more than men for the same goods and services.
- Oil and gas companies may be using public lands to pad balance sheets, according to a new report.
Coming This Week
- Tuesday 10:00am: ISM Manufacturing Index (for August):
https://www.instituteforsupplymanagement.org/ISMReport/MfgROB.cfm?SSO=1
- Thursday 2:30pm: JEC hearing on the tax cuts’ impact to the economy:
- Friday 8:30am: Employment Situation (Jobs report, for August):
