As we celebrate the Thanksgiving holiday, let that serve as a reminder. Winter always follows fall. Some winters are less severe than others, but winter is coming just the same. I was on travel last week to western New York, and we were surprised by an early snow storm. If you are living on the East Coast, you know full well that the fall is coming to a close, and winter is just beginning. The same could be said of the economy. Since enactment of the tax cut in 2017, we have been enjoying a business climate similar to an “Indian Summer” in the Midwest, where above normal temperatures extend into the late fall.
The Indian Summer concept and the elections earlier this month remind me of a recent political event in my state. There was a senate bill in California (SB 905) that proposed extending the time for bar patrons to purchase alcohol from 2pm to 4pm for certain cities (Los Angeles, Sacramento, San Francisco, and others). It was introduced by Senator Scott Wiener in January 2018, and approved by the assembly and senate in August. The bill was presented to the governor for his signature on September 10th, 2018. On September 28th, Governor Jerry Brown vetoed the bill, saying: “I believe we have enough mischief from midnight to 2 without adding two more hours of mayhem.”
In my mind, the Trump tax cuts (aka, the Tax Cuts and Jobs Act) was a similar attempt at delaying the inevitable. If the tax cut wasn’t enacted, we would probably already be in a recession. However, all the tax cut achieved was a temporary boost to the economy and a higher stock market, and it delayed the recession out to 2019 (or 2020, if you believe the Fed). In the end, the recession is still coming. It’s close to 2pm – almost “closing time,” with respect to the economy, and as the song by Semisonic goes: “…every new beginning comes from some other beginning’s end.”