You could almost hear the exhale from left-leaners when the U.S. Bureau of Economy Analysis released its report on the fourth quarter gross domestic product.
In a year where we saw steady above-3 percent growth for the middle quarters, the end of the year fell .4 percent shy of the president’s economic goal. The op-eds wrote themselves. You could feel the joy behind your computer screen that President Trump missed this vaunted goal.
It’s all true. The fourth quarter GDP-growth didn’t stay above 3 percent. But that doesn’t mean the economy fell flat. Dig into the numbers: Americans are making more, contributing more to the global market, and setting up for a strong 2018 economy.
The liberal joy at watching the president fail is a built on a façade propped up by a toothpick: the trade deficit. When you look inside the U.S. economy, you see President Trump delivering what he promised, jet fuel for economic growth.
A look inside the GDP
Here’s a quick refresher on an overused buzz term: the GDP. This measure of economic health looks at several categories. There is consumer consumption, investment, inventories, trade, and government spending. To have all five rising creates a strong GDP. In this quarter, you guess it, some of the categories nosedived.
I’ll give you the good and bad. Let’s rip the Band-Aid off and do bad first.
The U.S. GDP faltered in two key areas: trade and inventory. President Trump has railed against the trade deficit; that is the gap between exports and imports. In the fourth quarter, the U.S. got crushed. However, it’s actually only bad on a superficial level.
Exports from the U.S. rose in the fourth quarter at a staggering rate of around 7 percent. It’s just that imports outpaced them by double. We shipped out more than normal, but we also brought in more.
Part of that could have been caused by problem number two: inventory. Basically, demand for goods was so high we ran out.
That brings me to “The Good” in the GDP report: consumer spending. We spent money on goods like they were going out of style. It was the fastest growth in that area in three years. Remember that’s a big part of our economy. What led the spending on was a growth in wages.
That’s right, this is the nugget for you. For all the negative press about cushy corporate tax cuts and the death of the middle class, here is an indisputable fact: Personal income boomed.
Our economy increased personal income by $179 billion. I know, that is out of context. Here is your context: We added $112 billion in the third quarter. That is across-the-board dollars added into our pockets.
In my estimation, money in the pocket is probably the most important thing for you and the economy. When you look at it from that perspective, you can’t call the fourth quarter a dud. The rise in income is the exclamation point Trump put on 2017.
2018 could be even better
I am always cautious about pretending to understand any complex organism. (I get chills reading the word mitochondria.) To predict its future has even more pitfalls. However, everyday economists on both sides speculate on the rise and fall of the U.S. GDP in 2018. There are some key points that signal a positive 2018.
Let’s look back to go forward. In 2016, the economy grew at 1.5 percent. You wonder how Trump got elected. In his first year in office it will rest at 2.5 percent.
In other reports that came out in January, key growth rates were highlighted. U.S. factories saw orders rise. Businesses spent at a rate unparalleled in three years. Economist say among many factors, the tax cut has propelled a level of growth that added to the momentum.
If you look at anything with rose-colored glasses, it’ll look pretty. So I understand skepticism. However, these are just facts. These numbers aren’t open to debate. They are just plain and presented by the government. Historically, if these numbers continue on this pace, 2018 could deliver 3 percent growth across the board.
The GDP is a funny measure of economy. We use it as political firepower on both sides. In 2014, President Obama had two big quarters so Republicans focused on the other two quarters that landed in the negative.
It’s the same here. The difference is President Trump isn’t making up ground with government spending or from a market correction.
One look at the 2017 numbers and you can see he is tinkering with the economic engine that has been stuck in neutral for too long.
2018 may be the year he has it running in vintage Reagan-era fashion.
Article last modified on July 12, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Trump’s Economy Missed His GDP Goal, But That’s OK - AMP.
Article last modified on July 12, 2018. Published by Debt.com, LLC .