4.1 Percent GDP Growth

The numbers are out and the economy performed very well this quarter, reaching a 4.1 percent GDP growth. That’s the best quarter the economy has seen since 2014. Several factors went into this growth. A 4 percent increase in consumer spending certainly helped stimulate economic growth, despite a slight drop in private investing. The current administration’s tax cuts were likely a factor in this quarters performance.

Taxes stifle economic growth. People are less likely to take risks in their careers, business, and investing if they know they will have to pay taxes on their success. Think of it like a scale. People tend to only take financial risks when the profits of success outweighs the risk of failure. Taxes disincentivize financial risk by taking away a percentage of the profit of success. This is especially true of progressive taxes, because the more successful one is the more he or she is taxed. Reducing taxes, therefore, increases the desirability of taking financial risk. Our capitalist economic system is driven by the willingness to take risk. It follows that reducing taxes benefits the economy at large, as this quarter has demonstrated.

While the economy may be doing well, lots of Americans are still feeling the burden of unmanageable debt. If you’re facing excessive debt, consider giving us a call for a free consultation. I have helped well over a thousand clients including Auburn bankruptcy filers and would be happy to assist you.