Aggregate demand is a nation’s output of goods and services demanded at different price levels, or in other words, it is an economy’s gross domestic profit. According to Eric P. Chiang, consumer spending is aggregate demand’s largest competent, representing just over two-thirds (68%) of spending within the United States economy. The level of consumer spending is affected by things such as wealth, household debt, interest rates, consumer confidence, and taxes, but the consumer spending level is typically stable over time. Consumer spending consistently rose throughout the end of 2017 as the demand for goods and services increased. But despite these increases, savings dropped to a 10 year low. According to economists in Lucia Mutikani’s article,
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Commerce Department consumer spending increased by 0.8 percent in late 2017, while savings fell from $365.1 billion to #351.6 billion (a $13.5 billion decrease) in the same time period (CITATION NEEDED HERE). This 3.6 percent decrease (Cox, Savings rate hits lowest since finical crisis as Americans take on more risk) could signal potential troubles for consumption and economic growth in the upcoming future according to Lucia Mutikani. The last time savings were at this level was in December of 2007, which is when the United States economy fell into a recession. According to Michael Gaspan, a chief economist at Barclays in New York, in Mutikani’s article if savings continues to decrease it will likely limit the extent and rate at which consumption can accelerate. Although this decrease and potential limit may be offset by the income tax cuts put in place in January of this …show more content…
The next two quintiles would see their income increase 1.6 percent and 1.9 percent… the biggest increase, 2.9 percent, would go to those in the top-earning fifth. (Amadeo, “Trump’s Tax Plan and How It Affects You”).
Businesses will also benefit from these tax cuts, which may subsequently benefit individuals as well. Walmart, the nation’s largest private employer, has stated that it will use the money saved by the recent tax cuts to give employees bonuses, increase benefits, and raise wages. The Act has been criticized for benefitting large corporations and business more than individuals as the cooperate tax cuts are permanent while the individual cuts expire following the year 2025, in addition to offering the largest income increase to those in higher tax brackets as opposed to the lower or middle classes. Despite these critiques, the Tax Cuts and Jobs Acts does have the potential to directly and indirectly increase individual income. The United States Treasury has reported that the bill would project an average 2.9 percent economic growth annually in addition to bringing an estimated $1.8 trillion in Revenue (CITATION NEEDED HERE). Individual income will be directly impacted by these tax cuts in a positive manner. In addition, individual income could be indirectly impacted by the direct benefits received by corporations from these cuts
Commerce Department consumer spending increased by 0.8 percent in late 2017, while savings fell from $365.1 billion to #351.6 billion (a $13.5 billion decrease) in the same time period (CITATION NEEDED HERE). This 3.6 percent decrease (Cox, Savings rate hits lowest since finical crisis as Americans take on more risk) could signal potential troubles for consumption and economic growth in the upcoming future according to Lucia Mutikani. The last time savings were at this level was in December of 2007, which is when the United States economy fell into a recession. According to Michael Gaspan, a chief economist at Barclays in New York, in Mutikani’s article if savings continues to decrease it will likely limit the extent and rate at which consumption can accelerate. Although this decrease and potential limit may be offset by the income tax cuts put in place in January of this …show more content…
The next two quintiles would see their income increase 1.6 percent and 1.9 percent… the biggest increase, 2.9 percent, would go to those in the top-earning fifth. (Amadeo, “Trump’s Tax Plan and How It Affects You”).
Businesses will also benefit from these tax cuts, which may subsequently benefit individuals as well. Walmart, the nation’s largest private employer, has stated that it will use the money saved by the recent tax cuts to give employees bonuses, increase benefits, and raise wages. The Act has been criticized for benefitting large corporations and business more than individuals as the cooperate tax cuts are permanent while the individual cuts expire following the year 2025, in addition to offering the largest income increase to those in higher tax brackets as opposed to the lower or middle classes. Despite these critiques, the Tax Cuts and Jobs Acts does have the potential to directly and indirectly increase individual income. The United States Treasury has reported that the bill would project an average 2.9 percent economic growth annually in addition to bringing an estimated $1.8 trillion in Revenue (CITATION NEEDED HERE). Individual income will be directly impacted by these tax cuts in a positive manner. In addition, individual income could be indirectly impacted by the direct benefits received by corporations from these cuts