Supply Side?

The jobs report in December was a bit disappointing but one month is not a trend.

The impact of the tax breaks on employment will only be seen over time.  This is a supply side approach where reducing the cost of production leads to cheaper products and more consumption.

It looks good on a graph but is that how it actually works in real life?

If there are products that people would buy if they could afford them, lowering those prices would result in a purchase.  The question is how significant is that event and do the lower prices make sense for the manufacturer.

If you accept the supply side theory it implies that manufacturers are eager to expand production an accept lower profit margins for the sake of market share.  This may be true in some cases.  However, expanding production and hiring more workers, the essential part of the theory is risky.

Expanding is a risky endeavor and hiring workers is a bit of a commitment.  Each industry is of course different but the other factor is simply will the demand materialize?

Take something like smartphones.  Market saturation is close and the future seems to be in developing new features rather than making the product cheaper.  There are already cheaper alternatives available so how much incentive is there for the market leaders to reduce prices in the hope of greater market share instead of simply increasing profit margin?

I don't think its much.

A lot of these theories seem to assume that demand will simply materialize but if America is a fairly mature market will limited population growth, I would wonder where this demand is coming from?

Certainly some new demand may be generated by lower prices but is it going to stir the type of economic growth we would need to offset the loss of revenue?  I don't see anyone predicting that and it doesn't seem remotely likely.

Increased profits is very likely and the stock market reflects that.

More jobs?  Maybe a few.

More debt?  Quite a bit and a likely attack on entitlements nearly certain.