A Funny Thing Happened on the Way to 4%

@TBPInvictus here.


Real GDP Percent Change from Quarter One Year Ago, Annually, End of Period

Source: FRED


The Bureau of Economic Analysis (BEA) released 2019 second quarter GDP last week. It registered (first pass) at a slightly-above-consensus 2.1%, down from Q1’s 3.1%.

Of equal (or greater) interest were the revisions of five years’ worth of data, as described here.

The conclusion of the revisions was: Full-year 2018 was revised down to 2.5%, lower than 2017’s 2.8%. Mind you, this is on a Q4/Q4 basis, which of course was the way the administration told us this number needed to be viewed (when it exceeded 3%, anyway). The annual year-over-year remained unchanged at 2.9%.

The downward revision to under 3% – to say nothing of the 4% we were promised – flies in the face of everything we were told about the “boom” we’d see from the 2017 tax cuts and deregulatory regime, the signature policies of the Trump administration:

“With the tax plan, we’re going to easily see 4 percent growth next year,” National Economic Council director Gary Cohn said in an interview on Fox Business.

Trump, Dec 6 2017:

I see no reason why we don’t go to 4, 5, and even 6 percent. And I don’t want to go beyond that because then it will be criticized if we don’t hit it.

Adding insult to injury, last year’s much touted 4% Q2 was also revised away, down to 3.5%, taking away yet another talking point.


Trump’s lofty forecasts have not yet been realized. What we’ve been achieving is the more-or-less same trend growth since 2010. The Tax Cuts and Jobs Act (TCJA) has led the USA to trillion dollar annual deficits; the national debt continues to swell. No one can make the claim — at least not with a straight face — that the TCJA has paid for itself as promised.

On the whole, left the country’s balance sheet in worse shape than it had been prior to its passage, without a whole lot to show for it. The TCJA has, in every way, been an economic nothing-burger.

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