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Retail Sales up? What will soon follow.

This age old question that has the same answer can be used to apply to our current economic state on a national level.

What our current President and political leaders will see is that because of these tax cuts, our economy will shoot up.  This holiday quarter has been amazing for businesses.  According to the Washington Post, the National Retail Federation, reported more than 3% increase to holiday sales.  Speculators can say that it was just a normal trend within the realm of holiday sales but I argue otherwise. Consumers are reacting to the conditions of the market.  Now that they know their tax cuts are safe, they can spend money knowing that their raises (if they were given any) will not go straight to the government.

Now what you will see, is that businesses will open up hiring, especially small businesses.  When a controlling force like a government has so many restraints on their domestic markets, people button up.  This argument has been running for the hundreds of year. 

Lets look at the formula for Gross Domestic Product:

GDP= C + Inv + G + (eX-i)

First off, why is GDP significant?  I am not speaking to economics rookies but GDP signifies the producing power of the economy.. It is the monetary value of goods produced.  It examine a nation.  You can compare this growth to other countries.  So the classic argument,  Which is going to increase your countries production, Government Spending or DecreaseTax cuts?  My personal standing is that government spending can jolt an economy but it can not be maintained because in order to cary government spending you also need to increase taxes eventually. 

What you will see is, as Government spending slides out in exchange for a decrease in Taxes, the GDP will increase. 


What's your opinion?


-J


Washington Post Article: www.washingtonpost.com/wp-dyn/content/ar...


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.