President Trump on Wednesday reversed his position on cutting payroll taxes to spur economic growth, telling reporters on the White House lawn that "we don't need it."
The reversal comes after days of mixed messages from the administration. The White House had first denied that it was considering a cut to payroll taxes since the economy, top officials claimed, was sound. However, on Tuesday, Trump said "payroll tax is something that we think about and a lot of people would like to see that."
In another about-face on Wednesday, Trump announced that he is "not looking at a tax cut now." The remarks follow a growing number of economists who have publicly warned that a recession in the U.S. is on the horizon.
"I don't think [Trump] is particularly concerned if what he says one day disagrees with what his advisors said the day before," said Brian Brenberg, the chair of the Program in Business and Finance at The King's College. "It's classic message testing by the president" to see how the media and markets react.
Recession concerns largely emerged last week after the U.S. Treasury's yield curve inverted; in other words, short-term investments in government bonds are now expected to pay more than long-term ones. The inversion — the first since the economic collapse of 2007-2008 — sent the markets plummeting.
A survey released this week by the National Association for Business Economics also found that 74 percent of U.S. economists believe the country will go into a recession by 2021.
"We don't need [a payroll tax cut]. We have a strong economy," Trump said Wednesday.
Payroll taxes, which apply to both employers and employees, are ubiquitous in the U.S. economy and fund major federal programs like social security and medicare. The taxes were lowered as part of the economic stimulus package following the Great Recession a decade ago, and the cut was extended by President Obama in 2012. Republicans initially opposed the cut at the time, citing concern over the federal deficit.
Yet today, many economists caution against cutting payroll taxes given the country's historically low unemployment, the current strain on social security spending, and the government's growing deficit, which has ballooned under Trump following policies like the 2017 tax cuts.
"Payroll taxes are a significant source of government revenue, and payroll tax cuts have been found to have little to no impact on long-term economic growth," the Tax Foundation said on Twitter.
On Wednesday, moreover, the Congressional Budget Office said that the federal budget deficit is accelerating faster than expected. The agency updated its deficit forecast to $960 billion in 2019 and over $1 trillion in 2020.
Cutting payroll taxes, experts say, will also not address the core concerns of investors: tariffs and trade.
"Most investors are unified in believing the only thing that's really going to meaningfully change the conversation around recession is doing something on trade," Brenberg said, noting that Trump's remarks on Tuesday did little to boost the markets.
Adam Michel, a tax policy analyst at the conservative Heritage Foundation, said that "high tariffs and trade uncertainty" were the main impediments to economic progress. "If the administration wants to boost the economy, they should start there," he said.
As Meta and Microsoft ramp up their AR and VR tech futures, analysts have been waiting on word from Apple, but the consumer tech giant is reportedly delaying such an announcement. Doug Astrop, a managing partner at Exponential Investment Partners, joined Cheddar to dive into the rumors about the possibilities of a foray into the metaverse by Tim Cook's megacorp sometime in 2022 or 2023. "We can't really predict with a great deal of certainty how it's going to play out, but I'm confident Apple's going to be a big player and do very well in any scenario that unfolds," said Astrop.
Monster Beverage is charging into the beer and hard seltzer biz with its $330 acquisition of CANarchy Craft Brewery Collective. The energy drink finalized the deal a week after Constellation Brands Inc. made a deal with Coca-Cola to acquire the Fresca brand.
Ford has seen a record 52-week high for its valuation, hitting more than $100 billion for the first time. The rise in its stocks comes amid its push for more electric vehicles, including the highly anticipated F-150 Lightning pickup, coming this spring.
Specializing in AI, robotics, and automation for the global supply chain, Symbotic announced last month it will be tapping the public markets in a SPAC deal with investment giant SoftBank. Symbotic CFO Tom Ernst and Vikas Parekh, a managing partner at SoftBank Investment Advisers spoke with Cheddar about going public and the future of modernizing logistics amid the constrained supply networks. "The supply chain is fundamentally broken," said Ernst. "By employing the best in modern technology for autonomous vehicles and artificial intelligence, we're able to fundamentally rethink the way in which you receive and store and sort goods, making for a dramatically more efficient supply chain."
JP Morgan Chase beat Q4 earnings estimates, largely attributed to credit card borrowers and corporations. Meanwhile, Wells Fargo also reported strong quarterly earnings and saw a 15 percent growth in its shares for the year.
Taiwan Semiconductor Manufacturing Company (TSMC), the largest supplier of semiconductors, doubled its Q4 revenue forecast and announced a $44 billion investment for expanded chip manufacturing in 2022. Caleb Silver, Editor in Chief at Investopedia, joined Cheddar to discuss the future for the global tech giant. "It has the money. It has the equity. It has the dominance over the market, so not a surprise at all, and it's taking charge as we head into this sort of next phase of advanced chipmaking," Silver said.
Grocery stores are restricting hours and services due to omicron-related labor and supply chain issues. This also comes at a time of labor unrest for supermarket giant Kroger as more than 8,000 workers at its King Soopers chain in Colorado have gone on strike.
Michael Hershfield, Founder & CEO of Accrue Savings, joined Wake Up With Cheddar to discuss the company's new round of funding, and its core mission of rewarding consumers for saving rather than taking on more debt with buy now, pay later options.
Ellen Davis, Executive VP of Industry Engagement at the Consumer Brands Association, joined Wake Up With Cheddar to break down what consumers need to know about how the pandemic and supply chain constraints are affecting the availability of everyday items.
Michele Schneider, Partner and Director of Trading Research & Education for MarketGauge, discusses the major headwinds facing the markets and highlight which areas within tech are seeing the most growth.
