Friday’s employ­ment data was the lat­est of a series of data show­ing marked improve­ment in the U.S. econ­omy. ISI counted 18 straight weeks of stronger U.S. data includ­ing bet­ter vehi­cle sales, same store sales, home­build­ing and manufacturing.

Also, U.S. money sup­ply is grow­ing at a robust 10 per­cent year-over-year, greas­ing the wheels for America’s eco­nomic engine, which showed 3.7 per­cent growth in nom­i­nal GDP in the fourth quarter.

What was the spark that lit the bot­tle rocket and sent the fire­ball into the sky for the economy?

The Wall Street Jour­nal recently reported U.S. cor­po­rate tax receipts as a share of prof­its were at the low­est level in 40 years. Cor­po­ra­tions paid a tax rate of 12 per­cent on prof­its dur­ing the fis­cal year that ended Sep­tem­ber 30, 2011, less than half the aver­age rate com­pa­nies paid from 1987 to 2008. They employed a tax incen­tive known as “bonus depre­ci­a­tion” allow­ing busi­nesses to deduct the cap­i­tal that they invest back into their businesses.

At the same time, cap­i­tal expen­di­tures for Amer­i­can com­pa­nies reached $1.5 tril­lion in 2011, up 10 per­cent from 2010. This is the third year in a row of increased capex spending.

There appears to be a mul­ti­plier effect here: As cor­po­ra­tions pay fewer taxes, they can deploy addi­tional cap­i­tal by expand­ing their busi­nesses and pur­chas­ing new fleet vehi­cles, machin­ery and data sys­tems, which then cre­ates and main­tains thou­sands of jobs for Amer­i­can citizens.

It is unlikely the U.S. gov­ern­ment would have achieved the same return on invest­ment and mul­ti­plier effect on the economy.

All opin­ions expressed and data pro­vided are sub­ject to change with­out notice. Some of these opin­ions may not be appro­pri­ate to every investor.

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., and a Toronto, Canada native, which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure. The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories. Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.” He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies. Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications. Read more from the author/contributor here.

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