What caused the GDP growth under Trump? Understanding what makes the economy shift can be a mystery.
I am always shocked which economic news the mass media will headline. When the Dow plummets, and rightfully so, it is a breaking news event. But, let us pretend that Donald Trump’s “wild predictions” of 3 percent growth come true? Would that be a front-line narrative?
I think it’s pretty obvious at this point it would not.
The mass media has a vendetta, possibly rightfully so, with the commander-in-chief. It has so poorly clouded their editorial vision that it makes you wonder if they are already searching for the negative before the news breaks.
My point is — I had to search awful hard to find how the U.S. GDP is measuring up this second quarter. The Federal Reserve released their figures and plans for interest rates. The focus from the news fell on the interest rates rising.
However, buried within this story is the meat of this deal. No one properly predicted GDP or retail growth this quarter. All expectations have been half of what the economy is actually showing.
More clearly, Trump’s second quarter economy is growing at a rate no one expected. He promised his policies would carry us here and he is delivering. With a growing GDP, wage growth cannot be far behind.
Who is down with GDP?
Here is what happened. The first quarter was a bit of a dud for the Gross Domestic Product. I explained that the growth was lower for two reasons.
First, imports outpaced exports. We produced more than we have in years, but the international community produced even more.
Second, we sold out of our inventory. Sure, we can have all the disposable income in the world, but the GDP looks bad if you can’t spend it.
That same spending by consumers has ramped up. Preliminary reports for May show inventory for U.S. companies met the demand. Consumer spending shot above expectations.
Check this out: In May, retail sales grew by almost 1 percent. That is the biggest gain in half a year. Hilariously, it is double what was projected. Experts did not see this coming.
At this point, looking at the numbers, reserve banks believe we will finish the second quarter with a GDP growth of 4.8 percent. Do I need to remind you that is more than double the first quarter?
All of this is to say: I told you so. Economic experts now believe that Trump’s 3 percent average growth rate is attainable. So there.
How did we get here?
In all my celebration, I would be remiss if I did not explain what role President Trump plays in this news.
Most of this growth comes from more disposable income for households. It is evident that people are spending more because they have more after the Trump tax cuts.
Unlike an economic stimulus payout, the tax cuts are not a shot in the chest to revive the economy. They are a continuous source of new revenue. People are spending it.
You see the ripple effect everywhere. Last week, I explained how the new economy has more jobs than people looking for jobs.
How do you think we got to this point? Spending. More spending, more jobs. But, you need the income to do that.
It is the circle of economic life. (Obviously oversimplified, don’t bother pointing it out. Economics 101 is down the hall.)
This is what Trump campaigned on: economic growth. It is literally the only issue 80 percent of his voters cared about. The problem is we spend too much time focused on the bizarre and obscure.
Sure a fair amount of the blame can fall on the mass media. Trump should shoulder that blame equally. He is the instigator.
If you look beyond the pundits, there are historic things happening. The economy is growing in new ways. It is offering us all a chance at the American dream.
If we could just beyond the tweets, maybe we could find something to agree on: A rising GDP lifts all houseboats. I mean, households.
Article last modified on July 30, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The Curious Case of GDP Growth Under Trump - AMP.
Article last modified on July 30, 2018. Published by Debt.com, LLC .