Tweeter In Chief
It doesn’t mean companies can’t quietly do buybacks later, but it’s likely a number of them were already thinking about pay raises and hiring. Putting them front and center gives corporations the chance to deliver a high-profile thank-you to the Trump administration for the tax windfall. (Not to mention an opportunity to get a personal shoutout from the tweeter in chief, who will give his State of the Union address on Tuesday.)

Amherst Pierpont’s Stanley says it ultimately doesn’t matter why companies are investing more in their workers and businesses. The bottom line is they’re doing it, and he says that will help economic growth top 3 percent this year -- more bullish than any of the 83 economists surveyed by Bloomberg.

Most agree the tax overhaul will be a plus, at least in the short term. But just how much it ultimately moves the needle is up for debate. Since November, economists have started to slowly inch up their projections. They currently expect the economy to expand 2.6 percent this year and spending on plants and equipment to rise 6 percent. It would be a welcome lift after both growth and capex languished in recent years.

Nevertheless, the projections are well short of the “ 4, 5, even 6 percent” economic growth President Donald Trump has repeatedly promised to deliver.

PR Panacea
“Overall, it’s a net positive,” said Savita Subramanian, the head of U.S. equities and quantitative strategy at Bank of America Corp. “Whether it’s a panacea, I don’t know. It’s not like tax reform really drove a reason for companies to spend. The tax reform happened when the economy was also improving. It’s hard to say how much the improvement in the economy is tax-related versus the normal pickup in economic activity.”

One reason for the uncertainty is that while companies have been long on hoopla, they’ve been short on meaningful context or comparisons.

For example, it’s hard to know whether Apple’s five-year, $30 billion U.S. spending pledge is a significant increase. In the prior five years, Apple’s capex totaled $55 billion worldwide. (It doesn’t break out spending regionally.) Same goes for its hiring plan. Twenty-thousand new jobs sounds like a lot, but Apple’s global workforce has grown over twice as much since 2012. Spokesman Josh Rosenstock didn’t immediately respond to requests for comment.

“We haven’t heard a lot of specific steps,” said Matt Maley, a strategist at Miller Tabak & Co. Some of what we have heard, like the one-time bonuses, are “more PR than the real thing.”

Much was made of Wal-Mart’s wage bump and its $1,000 bonus because of how many low-income Americans it employs, but spokesman Kory Lundberg said at the time that a “sizable group” of its 4,700 U.S. stores already pay $11 an hour due to state minimum-wage laws. In fact, the $1 wage hike was the retailer’s third in as many years and “part of a longer-term trend” in the industry, says David Schick, director of research for Consumer Edge Research. Wal-Mart spokesman Blake Jackson declined to comment.

To be fair, there’s little doubt businesses really do prefer a staunchly pro-business administration intent on slashing taxes and rolling back regulations. After years of uncertainty, the rewrite not only gives companies a big windfall, but it also provides a permanent, low-cost way for them to repatriate trillions of dollars in untaxed overseas profits. Business confidence, which stagnated during the Obama years, is now sky-high.