By Tory Newmyer
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Federal Reserve Chairman Jerome Powell. (AP Photo/Susan Walsh)
The Republican architects of Trump’s tax cut said a big boost in business investment would prove the effort succeeded. That bump in corporate spending has failed to materialize nearly two years after the cuts passed into law and a new government report found it dropped 3 percent last quarter.
Here, via CNBC, is how that spending has looked over the last two years:

Powell cited the drop as one of the factors that prompted the central bank to cut interest rates for the third time this year.
The results render a harsh verdict on Trump's signature domestic achievement. “Compared to what was promised, I think the performance has been really lackluster and underwhelming,” Joel Prakken, chief U.S. economist for Macroeconomic Advisers, tells me. “Or maybe more accurately, whatever impact this had has been swamped by other considerations.”
Namely, the cloud of uncertainty cast by the trade war has kept businesses watching and waiting rather than plowing investments into new structures, equipment and other gear that could help improve efficiency. Tax cut proponents said the law would unleash a flood of that spending, ultimately boosting productivity, which would raise profits and worker pay, laying the foundation for sustained economic growth.
Research by Prakken’s firm found the trade war reduced business investment by about $40 billion in 2017 and 2018, shaving .2 percent off GDP in the process. “When you think about it, as long as that uncertainty is there, I don’t think any amount of tax incentive is going to have that big an impact,” Prakken says.
Business investment is hardly the only category in which the tax cut is underperforming. Trump promised his signature domestic achievement would “lift U.S. sustained annual economic growth to 3%, or even as high as 6%. His advisers said it would boost average household incomes by at least $4,000 a year. His Treasury secretary said it would pay for itself,” the Wall Street Journal’s Greg Ip writes.
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A worker stands by the gate of a construction site along the Mariner East pipeline in Exton, Pa. (AP Photo/Matt Rourke)
“Quite clearly, I think we can say what they promised is not going to come to fruition,” says Kyle Pomerleau, director of the Tax Foundation’s Center for Quantitative Analysis. “Most people in the tax policy community were saying that’s unrealistic even before the law passed.”
Powell said the central bank "does not see any evidence that business investment will weaken further.” But he also signaled the Fed is done cutting interest rates for the time being. “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook,” he said.
Tim Duy, the University of Oregon economist, writes on his Fed Watch blog that Powell is effectively declaring victory after the Fed’s series of rate cuts. “Such a ‘policy pause’ forecast feels like a good baseline going into the end of the year,” he writes. “After a fairly hectic year, Powell and his colleagues are moving off to the sidelines.”
MARKET MOVERS
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A trader works on the floor at the New York Stock Exchange. (Reuters/Brendan McDermid)
— Hong Kong slides into recession. Bloomberg's Eric Lam and Enda Curran: "Hong Kong’s economy contracted sharply in the third quarter as it entered a recession, exceeding economists’ worst estimates of the damage from nearly five months of protests. Third-quarter gross domestic product retreated 3.2% from the previous three months, after a 0.4% contraction in the second quarter. That’s the worst slump since 2009, in the aftermath of the global financial crisis. Two consecutive periods of negative growth mean Hong Kong has fallen into a technical recession.
"The economic debate now is focused on how long the downturn will last, if recent glimmers of stabilization point to a bottom, and if the U.S.-China trade war and the demonstrations have done lasting damage."
TRUMP TRACKER
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A person rides a bicycle past a burning barricade during a protest against Chile's government in Santiago. (Henry Romero/Reuters)
"Chinese policy makers are gathered in Beijing for a key political meeting that’s set to conclude on Thursday. In meetings ahead of that plenum some officials have relayed low expectations that future negotiations could result in anything meaningful -- unless the U.S. is willing to roll back more of the tariffs. In some cases, they’ve urged American visitors to carry that very message back to Washington, the people said."
— Chile cancels conference where China deal might have been signed: “Chile has canceled a pair of major global summits on the economy and environment in the coming weeks amid unrest in Santiago, scrambling [Trump’s] hopes of signing a first-step trade deal with China at one of the events,” my colleagues David Nakamura and Brady Dennis report.
“Trump was scheduled to attend the Asia Pacific Economic Cooperation forum in Santiago from Nov. 15 to 17. White House officials said he was planning to meet with China’s President Xi Jinping in a bid to lock in details of a ‘phase one’ trade pact that could ease tensions between the economic powers and lay the groundwork for a bigger trade deal next year.”
… But Treasury Secretary Steve Mnuchin says a deal is still likely to be signed in November: “Before the announcement, Mnuchin said the United States was ‘looking forward to President Trump and President Xi signing Phase 1 of our important trade agreement later next month when they’re together in Chile,’ adding, ‘I think that would be an important economic achievement for both of us.’ ”
— Starbucks stock jumps on U.S. and China sales: “Starbucks “reported quarterly revenue that topped analysts’ expectations as cafes in the U.S. and China attracted more customers,” CNBC’s Amelia Lucas reports.
“The company reported global same-store sales growth of 5%. Both the U.S. and China, its two biggest markets, reported strong same-store sales and increasing traffic.”
POCKET CHANGE

— The bellwether counties of a recession: "Why do we care how Robertson County, Tenn., Pontotoc County, Miss., Boone County, Ill., and Elkhart County, Ind., are doing, or how much they have in common? Because, in addition to manufacturing big-ticket luxuries beloved by the middle class, they have predicted every recession since 1975. Their 12-month average employment numbers always fall before a wider downturn begins," my colleague Andrew Van Dam reports.
"What can we learn from them today? Our most recent numbers, from early this year, show them bending south, but not cratering. But local officials remain upbeat, and it’s too early to tell if the counties are preparing to slip ahead of a downturn, or if any hint of weakness is just a temporary hiccup."
- Why these four?: "... Unlike many others that weaken before the broader economy, they have shown strong job growth in recent decades. Their past downturns were exceptional and thus struggles there might plausibly signify something bigger. And the implications are immense. These four counties won’t determine the next election. But the economy they inform us about will."

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Twitter CEO Jack Dorsey. (Jose Luis Magana/AP)
“Twitter CEO Jack Dorsey announced the shift in policy in a series of tweets, stressing that paying for political speech has the effect of ‘forcing highly optimized and targeted political messages on people.’ The move marks a break with Twitter’s social-media peers, Facebook and Google-owned YouTube, which have defended their policies around political ads in recent weeks.
- What a subtweet: Dorsey’s announcement came as Facebook was unveiling its earnings report.
“Siddharth Breja, who had been the vice president of global finance, claims in a lawsuit filed Tuesday that he was ‘inappropriately terminated’ in March, days after raising concerns about a shipment of mint-flavored refill kits and for protesting the company’s refusal to alert the public. The suit also alleges that Juul breached several California business regulations … Juul is already facing scores of lawsuits and federal scrutiny stemming from allegations it created a youth vaping epidemic.”
— Fiat and PSA agree to merge: “Fiat Chrysler Automobiles NV and Peugeot maker PSA Group of France have agreed on the terms of a merger that would create one of the world’s largest auto makers by volume with a market value of $48.4 billion, said people familiar with the situation,” the Wall Street Journal’s Eric Sylvers, Ben Dummett and Nick Kostov report.
“The boards of Fiat Chrysler, Peugeot and Exor NV, the Agnelli family holding company that controls the Italian-American car maker, approved the deal on Wednesday, the people said. Fiat Chrysler Chairman John Elkann is slated to become chairman of the newly merged company while Peugeot Chief Executive Carlos Tavares would be CEO. Both would have seats on the board of the new company, which would comprise six Peugeot appointees, including Mr. Tavares, and five from Fiat Chrysler.”
MONEY ON THE HILL
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Family members of Boeing Co. 737 Max crash victims hold photographs as CEO Dennis Muilenburg speaks. (Andrew Harrer/Bloomberg News)
The “hearing was far more intense than Muilenburg’s appearance before a Senate committee Tuesday. He sat almost level with families of the crash victims, who groaned at Muilenburg’s repeated evocation of his boyhood on an Iowa farm and were angered when Hamilton stumbled over the date of the second crash. Lawmakers raked through the documents they had gathered, asking Muilenburg to account for opportunities seemingly missed to avert the crashes. One congressman returned for several rounds of questioning to establish a single fact, while others assailed Muilenburg for taking home $30 million last year.”
DAYBOOK
Today:- Fiat Chrysler, Re/Max Holdings, Bristol-Myers, Clorox, Cigna, DuPont, Altria, Royal Dutch Shell, Sirius XM and Sanofi are among the notable companies reporting their earnings.
- Alibaba, U.S. Steel, Dominion Energy, AbbVie and Chevron are among the notable companies reporting their earnings.
THE FUNNIES
From The Post's Tom Toles:
BULL SESSION
— Nats win the World Series! The Post's Dave Sheinin and Sam Fortier: "Suddenly, it was all over, and the blue-jerseyed visitors were spilling and screaming out of every corner of Minute Maid Park — from their dugout along the third base line, the bullpen in left field, the expanse of outfield, all four corners of the diamond — and converging upon the joyous pile of humanity forming near the center. Once the Washington Nationals had no more giant mountains to climb, they took the small dirt hill of the pitcher’s mound, and they hugged and bounced."With one more comeback win, at the end of a comeback season for the ages, the Nationals were World Series champions. A 6-2 victory over the Houston Astros in Game 7 on Wednesday night sealed it, delivering the first baseball title for the nation’s capital since Walter Johnson’s Senators won their only one in 1924."
Here's a look at the end of the game and its aftermath:
From the Nats's Twitter feed:
From ABC News producer Chris Donovan:
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