Economic Forecast Panel Discussion

[Darrell KSR]

Attended a really neat two-hour economic forecast panel discussion presented by a CPA firm and wealth management group. Had some really smart people there who had a talent at being able to boil things down to areas where even I could understand it, and my economic level is a very low level, indeed. John Norris, managing director of Oakworth Capital Bank (and a contributing writer to the Montgomery Advertisor), was sort of the keynote speaker. Very informative and very entertaining guy.

Take this FWIW, but here were some of the most relevant talking bullet points.

* 2017 should be a good economic year. We've had 2 to 2-1/2% growth annually nearly forever, and it should follow that trend. Just because of the math and numbers, it is much more difficult than people think to change the numbers much.

* One key to see if we can get to the 2-1/4 to 2-3/4% rate is whether Trump can be successful in the first 100 days in the dual goal of simplifying the tax code and lowering corporate tax rates, and not be sidelined by issues related to things like the Ethics Committee, ACA, etc. If he can get that accomplished, it will create tremendous investor confidence level and have a multiplier effect.

* 2018 and 2019 will be down years. Destined to be, no matter who was elected. Tied to things beyond our control, and beyond our nation's control, such as the Italian bank fiasco, and the tentacles therefrom.

* If you go back to 1900, there has always--always--been either a depression, recession, or economic downturn in every decade. Every single decade. Sure, "past historical experience is not an indication of future results," but that's BS. It's the best indicator. It will happen again, and in this decade, it hasn't yet, as we've enjoyed an uptick since December 2008. Doesn't mean anything, we'll be fine, but the numbers won't be as good.

* From a tax perspective, one of the guys said that "Trump is a master of the head fake," and that the only real thing anybody can predict is that there will be change. He's good at saying something, then dialing it way, way back, and in some cases, going completely in a different direction. (Still better than the alternative choice we had for the economy, however.)

* The GOP plan and Trump plan differs in some respects for taxes, and I'm not 100% positive I remember everything they said, and whose plan was doing what, but I'm going to give you sort of their best guesses on what will occur, tax-wise.

* Estate tax will be repealed, most likely, in 2018. They heavily cautioned that those in need of estate tax planning should continue to take advantage of estate planning devices that could remove appreciation from the estate, however, because the fact that estate tax may be repealed doesn't mean it won't come back. It has been repealed multiple times in the past, and always come back at some point.

* The tradeoff will be that appreciation in property (capital gain) will be taxed at death; however, subject to an exclusion of the first $10 million in gain. That can be very beneficial to a lot of us who won't otherwise have to worry about estate taxes, even under today's estate tax rate (where a married couple can pass approximately $11 million together estate tax-free)

* Individually, expect the AMT to go away. Personal exemptions should go away, but the standard deduction should substantially increase. Individual tax rates will be simplified, and will be reduced. The "1%" will be the biggest benefactors, with their after-tax income improving, depending on which estimate you most believe, from 5-17%.

[KeithKSR]

Most of the time I ignore the drivel on Channel One as my students watch it. Today they were talking about the Obama tenure and the economic uptick under him. They went on to mention that there are fewer Americans working today than when Obama took office.

I think the artificial numbers and unemployment rates the government has put out make it appear we haven't been in a recession, but the folks who live in middle America know better.