Sorry, Paul Krugman: Investment Surged after Trump’s Tax Cuts

Share this chart Data from the Trump administration show tax cuts boost investment.

Last month, prominent liberal economist Paul Krugman had a curiosity of a tweet. Krugman dismissed, even derided, the idea that an investment surge like the one the Trump administration had promised from its corporate-tax cuts had ever materialized. But Krugman’s accompanying chart shows a line that supporters of the corporate-tax cuts could be expected to draw. Investment’s share of GDP starts to go up almost exactly when the Tax Cuts and Jobs Act would be expected to cause such an uptick.

Intrigued, I dug into the data and made a chart of my own. You can view it above. It compares investment just before a business cycle ends to investment right at the start of the business cycle. The timing of a policy relative to the business cycle matters if you’re trying to make sense of its effect on investment: Investment tends to decrease as you move later in the business cycle and, by definition, closer to the next recession. (Recessions serve as the bookends to business-cycle starts and finishes).

As you can see, after the Trump administration’s

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