Recent Significant Global Economic Events – Week 1

An Update on the Effects of the 2017 Tax Law:

Over the next seven weeks we will be discussing recent events that have had or will have significant effects on the global economy.

The Commerce Department reported on Thursday, June 20, that the amount of profits previously held overseas by American-based companies that was repatriated back to the United States in calendar year 2018 was $776.51B. In our January 2018 blog, we used a figure of $500B as a probable amount of profits that would be repatriated during 2018, and estimated the result in GDP growth would be 2.5% to 3.75%.

On a conservative basis, the $776B of capital flowing into our $20T economy represents an increase of almost 3.75% GDP growth. It comes pretty close to matching the rate of economic growth actually enjoyed by the United States in 2018.

Economically it makes no difference whether those companies used the money for dividends, stock buybacks, or investments. Money brought into our economy means that the USA capital has increased which is called economic growth.