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Morning Commentary

Who Pays for an Improved State of the Union?

By Charles Payne, CEO & Principal Analyst
1/29/2018 9:48 AM
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Tomorrow, President Trump will give his State of the Union speech and the stakes couldn’t be higher. The Economic momentum from unlocking that can-do spirit of America could stand a second boost of legislation that would include infrastructure investments and banking reform. 

The latter isn’t on the table, but the White House has hinted at a $1.0 trillion infrastructure plan that could balloon to $1.7 trillion leveraged by the private sector.

Meanwhile, some forces, including the Chamber of Commerce, are pushing hard for a gasoline tax to fund infrastructure. The Chamber gets the biggest tax cut in corporate America’s history and now wants low-income workers and middle-class families to pay more taxes. 

Just as crude oil is moving to multi-year highs, these guys think it’s smart to raise a tax that inordinately impacts the working poor.

In December, taxes were 18% for a gallon of gas; more recently, it’s 18.7% while crude has erupted to 57.0%. There are some smart folks working with the White House to come up with creative ways to fix our bridges and tunnels that won’t drop a ton of bricks on Main Street. There’s also a discussion about the Wall that could fetch $25.0 billion in financing. 


Today, we got the latest on personal income and outlays. I was watching for a spike in income and perhaps a rebound in savings. 

Today’s Session

Personal income and outlays results are reiterating the trends that have been in place for most of 2017.  Income climbed 0.4% against an estimate of 0.3%, while spending of 0.4% was below the 0.5% anticipated.  There was also a big revision to November spending to +0.8% from +0.6%.

Much is being made of the 2.4% saving rate, but I’ll take a deeper dive to underscore the pros and cons including the de facto official consumer confidence poll = Americans spending money.

Outlays of $54.2 Billion:

There is a fair amount of angst this morning.   

One word comes to mind on raising taxes on gasoline at a time when crude prices and then summer blends will be increasing the cost per gallon already; stupid. As you point out we need more cash in the pockets of working middle class and poor families who spend a lot of their income oon necessities (consumer goods).
And, beside that it just feeds the narrative of this administration favoring business over working class folks. A higher tax on gasoline means nothing to upper income people but a low wage working having to spend more just to get to work is a big deal.

garro on 1/29/2018 9:57:31 AM
As a New Zealander investing in the USA I do not understand the throw away line "There is a fair amount of angst this morning".
Are you unhappy with the spending? per the spending graph?
Means what- theres not enough spending?

Malcolm Boyd on 1/29/2018 3:27:50 PM
Not angst associated with news but with the market in general. I should have gone on the mention big time earnings this week, some worries about higher rates and the jobs report on Friday. I've done this many times in the commentary so from time to time think everyone knows- thanks for reminding me the importance of greater clarity even for older readers of the commentary. CP

Charles Payne on 1/29/2018 3:42:16 PM

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