Today's announcement of a 4.1% growth in the economy in the 2nd quarter. Not likely to continue at that rate - but it doesn't have to - 3% would be fine. Article below.
The Economy Grows Bigly. Donald Trump has every right to take a GDP victory lap.
Call it huge or fantastic or even beautiful. Trumpian adjectives are absolutely appropriate to describe the humming U.S. economy in the second quarter of this year. The great American opportunity machine is roaring once again.
While it may be unlikely that growth will be quite this strong in the quarters to come, Friday’s GDP report from the Commerce Department gives every reason to believe that a robust expansion will continue. That’s in large part because businesses have been making significant investments in new factories and equipment since the start of this year. Such capital expenditures are not one-quarter wonders—they allow higher production in the years to come.
This morning at the White House, the President described this encouraging trend:
The year before I came into office, private business investment grew at only 1.8 percent. Last year, it jumped to 6.3 percent. That was my first full year; we had to do a lot of things to get it to grow. And this year, it’s growing at 9.4 percent. So that’s a very tremendous increase. There hasn’t been an increase like that in many, many years -- decades.
... I happen to think we’re going to do extraordinarily well in our next report, next quarter. I think it’s going to be outstanding. I won’t go too strong, because then if it’s not quite as good, you’ll not let me forget it. But I think the numbers are going to be outstanding.
Why shouldn’t he think that? Mr. Trump’s cuts to regulation and tax rates are having exactly the intended effect. And there’s more good news in Friday’s report beyond the increased willingness of business owners to bet on long-term success.
Specifically, at least two other elements of the report suggest solid growth for the rest of 2018. Real private domestic final purchases (consumer spending plus fixed investment) grew 4.3%. This kind of growth is generally a signal that the next quarter will also be strong.
And Natixis economist Joe Lavorgna describes another tailwind in a note to clients. Businesses have an imminent need to restock their shelves:
The largest drag on Q2 real GDP was inventories; they fell nearly $28 billion at an annual rate which had the effect of lopping a full percentage point off of economic growth. A rebuilding of stockpiles is on track for the current quarter and beyond. This in turn should keep GDP growth above 3% and enable the economy to register a similar gain for the full year.
... the increase in inventory investment that accompanies the ongoing improvement in factory activity implies more job and income creation. In turn, this should help sustain consumer spending which rose at a robust inflation-adjusted 4.0% pace. Over the last four quarters, nominal personal income has increased by a solid 4.7% or 2.5% in real terms.
Right now the economy is so good that White House advisors are trying to figure out how to persuade more Americans to join the labor force and take all the jobs waiting for workers to fill them. A recent report from the White House Council of Economic Advisers sets the table for reform:
The timing is ideal for expanding work requirements among non-disabled working-age adults in social welfare programs. As was the case in the period of welfare reform in the mid-1990s, current labor markets are extremely tight and unemployment rates are at very low levels,even for low-skilled workers. Still, even if work requirements improve outcomes for the majority of affected recipients, some may experience negative effects, which is why it is important to design requirements carefully and to support recipients overcoming barriers to employment (e.g., lack of access to childcare, mental illness, or criminal records). Ultimately, expanded work requirements can improve the lives of current welfare recipients and at the same time respect the importance and dignity of work.
A booming economy in need of workers and new incentives to join the labor force mean that if Mr. Trump can avoid a trade war he has a chance to preside over an historic American revival.
GO 'THE DONALD' GO ! ! !
Posted by: Sweat | Saturday, July 28, 2018 at 12:41 AM