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4.8% Economic Growth?!

The Portly Politico24 Comments

Remember when President Obama, in Carter-esque fashion, gravely warned the American people that 2% annual GDP growth was the new normal?

The parallels between Obama and Carter’s doom-and-gloom economic forecasts–and between Reagan and Trump’s pro-American optimism–once again come to the fore with the latest predictions from the Atlanta Fed.

A piece at Breitbart notes that annualized GDP growth for the second quarter of 2018 is a whopping 4.8%.  And that’s despite threats of a trade war.

Maybe the scare over tariffs is premature, or the United States is in a position to benefit from playing some hardball on trade.  Free trade is not an unalloyed good, though it is certainly beneficial, and tariffs are not unequivocally bad.

Mostly, though, it seems that the tax cuts are working.  America is getting its economic groove back.  Trump is making America great again by getting government out of the way and letting business thrive.

24 thoughts on “4.8% Economic Growth?!”

  1. I heard a speech yesterday where it was told that a Gallup survey showed there are 3 Billion people in the world who want good jobs, but only 1.8 Billion good jobs. That leaves a whopping 1.2 Billion people in the cold. We need to support business.

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    • A stunning statistic. I do know that, while the government’s reported unemployment rate is low, the way unemployment is calculated leaves out Americans who have dropped out of the workforce entirely–the legendary “workforce participation rate.”

      I’m always wary of the term “good jobs,” because I don’t know how it’s defined. Is a “good job” one with air-conditioning? One man’s “good job” is another’s daily hellhole. Some folks want to work outside and get dirt under their nails; others want to command the heights of industry–etc., etc.

      I do know that there is work to be had, and hustle to be bustled. Those who are simply unable to work due to physical or mental conditions, of course, should enjoy support and protection from those of us that are able to do so.

      I’m also a major advocate of sensible retirement planning, saving, and investing. Financial education is crucial; a lot of folks are simply uninformed about how to live on a budget, how to save, how to invest prudently, etc.

      Thanks for the comment, Linda. New post will pop on Monday, 11 June at 6:30 AM.

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  8. Tyler, have you considered the fact that quarterly growth reached 5.1% under Obama in Q2 of 2014? He even managed to acheive that without spending trillions of non-existent debt dollars on tax cuts for the wealthiest in American society.

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    • Hi Adam. Thank you for your comment. I was ignorant of this fact. I would point out the billions of “non-existent debt dollars” spent in economic stimulus that did not seem to yield the desired results. The markets did enter a “sugar high” in the latter half of the Obama Administration due to quantitative easing. I’d be interested to hear your take on that as an economist.

      Note, too, that cutting taxes isn’t “spending,” per se; my only real critique of the tax cuts (which actually _hurt_ higher-earners in States with high income taxes, like New York or California) is that they weren’t coupled with some dramatic cuts in spending.

      Thank you again for your comment. Your blog looks quite interesting; looking forward to reading more of it.

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      • Thanks for the reply Tyler. I would argue that the monetary and fiscal stimulus provided during the Obama administration was a necessary step in pulling the US economy out of the hole it fell in in 2008, even during his second term. My issue with the tax cut is that it comes at a time when we are clearly entering the boom phase of the business cycle. The economy doesn’t need it. If the US were Germany and were running a fiscal surplus, then there wouldn’t have been a problem. The issue is that the national debt has been expanded massively at a time when the American economy is doing just fine. Republican lawmakers, too wrapped up in their ideological support for low taxes, have failed to appreciate that there is a time and a place for such stimulus policies, and this probably isn’t it.
        I would also question how much room for further cuts the American state can handle. The state department has already been gutted, leading to a notable absence of America diplomats all over the world, which can only be a bad thing. Perhaps military spending is the only area where there is any room for cuts, though I doubt Republican lawmakers will be doing that any time soon!
        Always great to hear another perspective, will be looking out for your posts to 🙂

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      • Thank you for your thoughtful and cordial reply, Adam. I suppose for there are two questions: is the boom a result of cyclical trends already underway because/in spite of the policies of the Obama Administration, or does President Trump and his economic policies (including the tax cut) explain the boom? I imagine there’s a sprinkling of both, but as I’m not a Keynesian, I don’t have much faith in the “priming the pump” approach. You might be able to elucidate on that point further.

        The second question I consider is one of principle: is the economy better served with higher or lower taxation, regardless of the form? Obviously, I realize that the Laffer Curve works in reverse—just as higher tax rates see diminishing returns in terms of increased revenue (people don’t work as many hours, they evade the higher tax rate, etc.), at a certain point cutting taxes sees diminishing returns, too, and the positive impact to economic growth a big cut (say, 35% to 22%) is going to be larger than the next cut (22% to 15%, for example). America’s corporate tax rate relative to other developed and some emerging markets was far too high—one of the highest in the world. While I share your concerns about the ballooning deficit and massive national debt, it seems that this situation was placing far too much drag on the American economy, especially as it discouraged repatriation of profits earned abroad.

        The national debt will have to be addressed, of course, and soon. Military spending may be one such option, although the major drains on the public coffers are social welfare programs like Medicare, Medicaid, SSI, etc. Smarter military spending is definitely a way to go, though, and some redundant bases, both domestically and abroad, could probably be shuttered; I just don’t know enough of the particulars to comment at present.

        Thank you again for contributing to the discussion!

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  17. […] Since the end of the Cold War, when the battle against Marxism became more subtly a cultural one, social conservatives have been ejected in favor of economic conservatives and national security conservatives.  It’s square to insist that Americans should strive to live lives of chaste self-sufficiency and virtue, and self-restraint is bad for the bottom line.  Instead, let’s encourage all manner of degeneracy, so long as it helps GDP. […]

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  18. […] Material prosperity is a wonderful thing—I like being able to get pizza at 2 AM (not that I’m up that late anymore), and keeping a high-powered Star Trek communicator in my pocket that can access the storehouses of human knowledge at a swipe—and I am thankful for good food and a warm house.  Indeed, I think it’s a moral good for people to have gainful employment and the means to put food on the table. […]

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