CBSNews.com reported yesterday that
Wall Street — and the White House — eagerly await the release of GDP data on Friday that many economists expect to top 4 percent. The last time the economy expanded at a comparable pace was in 2014, when growth hit 5.2 percent in the third quarter.
Granted, a single three-month period of rising output is a limited gauge of the economy’s health. The quarterly figures are volatile and can swing sharply from quarter to quarter. But this year’s second-quarter number will be more closely watched than usual, thanks to President Donald Trump’s repeated pledge to hit annual growth of “much higher” than 3 percent.
The economy grew 2.3 percent in 2017, which is considered typical for the late stages of a post-recession recovery. GDP growth for a full year hasn’t crossed the 3 percent mark in 14 years.
“You’re going to get a GDP number on Friday that’s going to be a very impressive number. Some people are in the 4 to 5 percent zone,” Larry Kudlow, the White House economic adviser, told CBS This Morning.
Whether such robust growth is sustainable is another question. Here’s what turbocharged the economy in the second quarter.
GOP tax cuts
The second-quarter figure will be widely seen as a referendum on the GOP tax cuts of late 2017. This quarter benefits from a timing sweet spot, coming after the deficit-busting cuts trickled through the economy, but before the effects of the White House’s protectionist trade policies are fully felt.
GDP likely got a big boost from the additional tax-cut money going to both companies and consumers, economists say.
“When you drop taxes and increase spending, even if some of it is saved rather than spent, it boosts growth,” said Jim O’Sullivan, chief economist at High Frequency Economics. “Ultimately, that boost won’t last forever, and of course you’ve added to the government debt. But there’s no question that it’s stimulative.”
The tax cuts’ cornerstone was a permanent reduction in business tax rates, giving corporate profits an instant boost on paper. They would have been solid by mid-April, when corporations’ first-quarter tax payments are due. Many workers, too, saw slightly larger paychecks in February or March, with higher-earning workers reaping bigger benefits.
Consumers come back
Consumer spending has continued to rise. Because it makes up about 70 percent of GDP, it’s an important component for gauging overall growth.
“Retail sales have been really strong recently, up for five straight months, which is really kind of rare in this economy,” said Ryan Detrick, senior market strategist at LPL Financial. “Consumer spending is a big reason the GDP number is expected to come in fairly strong.”
For now, consumer confidence seems boosted by low unemployment, according to Morgan Stanley Research. “Consumption remains supported by a strong labor market and a lift to disposable income from the tax cuts, although some of these benefits are being eroded by rising gasoline prices,” Morgan Stanley economists wrote in a note.
An “idiosyncratic” quarter
Not even bullish economists expect the pace of the second quarter’s growth to continue, however, because it’s driven by “a number of idiosyncratic factors that are unlikely to be sustained in the second half of the year,” according to Morgan Stanley.
A major factor is the Trump administration’s aggressive trade stance, which is starting to be felt in some sectors and is expected to be a slight drag on GDP. The timing of the tariffs, however, has been a short-term growth boost as exporters rushed to finish shipments ahead of tariff imposition dates.
Don’t you just love how CBS is spinning great economic news into something mediocre?
Of course you know, if this prediction does ring true this morning, the MSM , the Democratic Party, and Liberals all over the Social Media will scream in unison,
This is Obama’s Economy!
And, they will be dead wrong.
Even CBS had to admit in the above article that the Economic Policies of Donald J. Trump are working.
So, just what is the “GDP” and why is it important?
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well (in the United States, for example, the government releases an annualized GDP estimate for each quarter and also for an entire year).
GDP includes all private and public consumption, government outlays, investments, private inventories, paid-in construction costs and the foreign balance of trade (exports are added, imports are subtracted). Put simply, GDP is a broad measurement of a nation’s overall economic activity – the godfather of the indicator world.
GDP is commonly used as an indicator of the economic health of a country, as well as a gauge of a country’s standard of living. Since the mode of measuring GDP is uniform from country to country, GDP can be used to compare the productivity of various countries with a high degree of accuracy. Adjusting for inflation from year to year allows for the seamless comparison of current GDP measurements with measurements from previous years or quarters. In this way, a nation’s GDP from any period can be measured as a percentage relative to previous periods. An important statistic that indicates whether an economy is expanding or contracting, GDP can be tracked over long spans of time and used in measuring a nation’s economic growth or decline, as well as in determining if an economy is in recession (generally defined as two consecutive quarters of negative GDP growth).
In other words, gentle readers, under President Trump, our nation’s economy is GROWING.
Even with all of the “stuff” that the Democrats have been flinging at the President, like gorillas fling at visitors at a zoo, he is still accomplishing doing what he said he would do: keep his campaign promises.
Trump has delivered what he promised: a stronger economy and more jobs.
Americans are more concerned with providing for themselves and their families than they are with the silly “Social Justice Warrior” Political Games which the Democratic Party, which is being run by the Far Left, continues to play.
Quite frankly, the reason that Obama Presidency did not move our economy forward, like President Trump is in the process of doing, is because Obama was more concerned about growing the Central Government, than he was about growing American Production by freeing the job creators from punitive tax rates, in order to encourage the growth that will revitalize our economy.
That is why I once spent 6 hours on a Saturday, on the phone with Punjab from Calcutta about my Comcast Cable Box, which was on the fritz.
But, I digress…
Make no mistake, granting amnesty to millions of unskilled, underage illegal aliens would have done and still would do nothing for the health of our economy.
This action would simply provide future voters for the Democrat Party, which is now, as I wrote earlier, firmly in the control of the Far Left.
A popular Liberal Defense that was going around during Obama’s Presidency was the claim that President Ronald Reagan actually had a bigger Federal Government than Obama.
The funny part is: It’s true.
It was larger because President Reagan, through his sound Economic Policy, actually increased tax revenues.
American Production rose, therefore, TAX REVENUES INCREASED.
Yes, “Trickle-Down Economics”, “trickled up”, allowing for a well-funded, strong American Military and Administration.
You see, boys and girls, that’s the secret of American Exceptionalism, a concept that Obama always gave lip service to, but, clearly, never believed in.
For America to prosper, we must remain free. For America to remain free, we must be prosperous.
American Capitalism is the engine which drives a strong, vibrant economy. American Capitalism is the result of the courageous Entrepreneurial Spirit of American Citizens. The same “Can Do” attitude which led to Western Expansion and triumphs against the enemies of a strong America, both foreign and domestic.
President Trump is succeeding as President because of his ability to focus on the challenges he faces and to come up with innovative, common-sense solutions.
His popularity continues to rise due to average Americans’ appreciation of a President who puts America first.
And as Trump continues on his mission to Make American Great Again, all the Democrats have to contribute is hate and divisiveness.
And, that is not an election-winning Party Platform to run on.
It’s the Economy, stupid.
BREAKING: 4.1% GDP growth in 2nd quarter 2018. #MAGA!!!
Until He Comes,