The second quarter Gross Domestic Product was upgraded by the Bureau of Economic Analysis to 4.2 percent inflation-adjusted, annualized growth, great news for the American people — and bringing the economy one step closer to restoring robust growth.
The U.S. economy has not grown above 4 percent since 2000, and not above 3 percent since 2005. But that could change in 2018 under President Donald Trump, who has promised his tax cuts, deregulation and “fair and reciprocal” trade doctrine would break the losing streak.
So far, the first two quarters have come in at 2.2 percent and 4.2 percent growth, respectively.
To get back on trend for 3 percent for year, the U.S. economy now needs to grow at about an inflation-adjusted 3.98 percent in the third quarter, and then it can finish out the fourth quarter with 3 percent. That would get us exactly 3 percent for the year.
The good news is that the economy may already be on trend to doing exactly that. Right now, Atlanta Fed’s GPDNOW estimate is coming in at 4.1 percent for the third quarter.
Also, the economy overall has produced nearly 3.9 million new jobs since President Trump was sworn in.
Overall unemployment is at record lows — 3.9 percent is a level not seen since 2000. Black and Hispanic unemployment is as low as it’s ever been.
Consumer confidence is as high as it’s been since Oct. 2000.
It’s no mistake.
The tax cuts have been in effect now for eight months. And the impacts of deregulation are all taking root.
As time goes on, President Trump is also racking up new trade agreements with South Korea, the European Union, Mexico and perhaps soon Canada as well.
Trump via U.S. Trade Representative Robert Lighthizer has notified Congress in the 90-day window that he intends to sign a new agreement with Mexico and Canada too if it wants in — talks continue this week — which will bring an end to the North American Free Trade Agreement (NAFTA) as we know it. Unlike prior deals, these include more concessions from U.S. trading partners.
That all means more U.S. exports overseas and less dumping by trade partners. Which by the way, is freer and fairer trade than Trump’s critics said was possible, who predicted—wrongly—that Trump temporarily levying tariffs would result in a permanent increase in tariffs. Instead, Trump is using tariffs as leverage to better trade deals.
It’s all coming together and it spells more economic growth. For those who have worried that robust growth is no longer possible, President Trump to his credit is focused like a laser beam on proving them wrong. We just need the third quarter to come in the way we’re all hoping. As usual, stay tuned.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.