Strong economy expected for 2018
Speakers from JPMorgan Chase and Key Financial say tax cuts will boost bottom lines of businesses and individuals
UWCHLAN » The economic outlook for 2018 is rosy.
Or is there a stronger term?
Optimistic, auspicious, hopeful, encouraging, favorable, bright, golden; upbeat, to name a few.
“If you look throughout history there are not many times as sweet as they are today,” said James Glassman, managing director and head economist for commercial banking at JPMorgan Chase, taking the historical and macroeconomic view of the year. “We are back on our feet” from the Great Recession, which has ripple effects throughout the world economy.
Glassman, Patti Brennan, president and CEO of Key Financial Inc., and Gary Smith, president and CEO of the Chester County Economic Development Council, made presentations to a crowd of about 120 at the 14th Annual Economic Outlook event held at the council’s Eagleview headquarters.
Even the labor market, which struggled for years with people working parttime jobs being counted as employed, is being corrected with more full-time jobs, Glassman said. And 3 million millennials who disappeared from the job market to go back to school during the Great Recession are back in full force in the workforce.
“The crisis is behind us,” he said.
Glassman and Brennan, who analyzed how the economy’s rebound is affecting individuals and small businesses, agreed the new tax law will improve what had already been an economy moving in the right direction.
“Almost every American family will see their income taxed at a lower rate,” said Brennan, a Certified Financial Planner. She called on investors to follow three steps she recommends at the beginning of new years: rebalance, rotate and review their portfolios and plans.
Brennan went over some of the major changes in the new tax law:
• Merging of the personal exemptions and the standard deduction;
• Capped or elimination of many itemized deductions;
• Elimination of the Pease Limitation and Alternative Minimum Tax, or AMT, for most people;
• A refundable Child Tax Credit of $2,000;
• Doubling of the Estate Tax Exemption;
• No more tax deductions for alimony;
• Big changes in corporate tax law. Among the winners:
• Families with several children under the age of 17;
• High Income filers; most people affected by AMT;
• C corporations, (and some S Corps and LLCs);
• Companies with money overseas;
• People who have private or public school expenses;
• People who don’t buy health insurance;
• Beneficiaries of large estates;
• CPAs and tax attorneys who have to explain the new law to clients. And the losers are: • States/counties with large SALT (state and local taxes);
• Families of 3;
• Larger families with children 18 or over;
• W2 employees who had business expenses;
• High income married couples;
• Charities (potentially);
• High end real estate agents and lenders;
• Divorcees;
• Personal service S Corps and LLCs (Income based).
Glassman said economists disagree over whether the tax cuts were needed since the economy was already growing, although at a slow rate. They are projected to add $1.5 trillion to the federal deficit over 10 years. He comes down on the side that thinks the cuts were a good idea. He said paying for programs like Social Security and Medicare in the future is “a huge problem building if the economy is only growing at 2 percent.”
“If we can figure out how to get more energy in the economy to offset the slower demographics, we make that fiscal problem much less than it is. You can worry about the effect of all this stuff on the deficit but I think the truth is, we have a nightmare ahead of us if we cannot figure out how to get the economy moving. And I think it’s worth taking a shot.”
Looking at the big picture for Chester County, Smith of the Development Council said prosperity is continuing into the new year.
Among the high points, he said, Chester County:
• Is the wealthiest county in Pennsylvania and 12th wealthiest in the nation;
• Is one of fewer than 50 counties in the nation to earn a Triple-A bond rating from all three reporting agencies;
• Is he 10th most innovative digital county in the nation;
• Has more than half of preserved land in the southeastern Pennsylvania’s fivecounty region;
• Has more than 100 colleges and universities located within 50 miles.
“This type of privatepublic partnership that we have here does not exist in other parts of the country, I can tell you that first-hand,” Smith said.