US Economy To Rebound On Tax Cuts, Experts Suggest

by Leroy Baker, Tax-News.com, New York

08 July 2003

The latest round of tax cuts recently signed into law by President Bush will likely lead to an economic rebound in the latter half of this year. This is the conclusion reached by 54 economists in the Wall Street Journal's latest economic survey.

The WSJ survey took the average of the economists' forecasts and revealed projected GDP growth in the third quarter of this year to be around 3.5% (annualized), increasing to 3.8% in the fourth quarter 2003 and maintaining this rate into the first quarter of 2004.

"This has been a horrible business cycle, but I feel better about the prospects for the U.S. and global economy than I have for four years," commented Allen Sinai, chief economist at Decision Economics Inc, who has revised his forecast upwards since the last economic survey. He pointed out that consumers will have an extra $47 billion in cash to spend through the remainder of this year as a result of income tax cuts, child tax credits and "marriage penalty" relief.

Whilst some experts continue to urge caution due to several false dawns in the last couple of years, many note the strong performance of the equity markets in recent months as a good indicator that more sustainable economic growth is on the way. A sure sign that the economists themselves are more confident is the fact that 35 of those polled have increased their stock holdings in the last year, compared to 14 in the January survey.

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