Trump economy's sustained growth pace unlike anything seen in 13 years

[Son of Jamin]

• The Trump economy may be doing something not seen since 2005 —growth at a 3 percent or better pace for three quarters in a row.
• Economists were ratcheting up fourth quarter growth to 3 percent or better after strong fourth quarter retail sales and strong revisions to prior months.
• The question is whether the trend can continue into the first quarter, which is typically weak and is vulnerable to weather impacts.

In the year since President Donald Trump has been in office, the economy has done something it has been unable to do since 2005 — maintain 3 percent growth for three quarters in a row.

While the final numbers aren't in, economists Friday were ratcheting up growth projections to 3 percent or better for the fourth quarter, after December's strong retail sales and revisions to prior months.

"It could even grow at 3 percent for the year. The numbers are very strong," said Joseph LaVorgna, chief economist Americas at Natixis. He forecasts an above consensus growth pace of over 4 percent for the fourth quarter.

Economists in CNBC/Moody's Analytics Survey upped their median fourth-quarter GDP forecast Friday by a median 0.4 to 3 percent. NatWest Markets raised fourth-quarter GDP to 3.5 percent from 2.7 percent, based on a stronger view of the consumer, and the Atlanta Fed GDPNow shows fourth-quarter growth now at a pace of 3.3 percent, from 2.8 percent earlier in the week.

When the White House said it expected 3 percent growth, economists were skeptical and many growth forecasts held to growth in the 2 percent range.

Economists say the White House can take some credit for consumer confidence, but in reality, the consumer was already spending before Trump and the GOP took control a year ago, and the labor market was already strong. However, the improvement in business attitudes and spending is a direct result of the changing of the guard in Washington and may be contributing to a more consistent growth pattern.

"I think the policies matter. In particular, business investment which was lagging badly through much of the expansion and really started to pickup in the last year, I think that does have a lot to do with the attitude about regulation," said Stephen Stanley, chief economist at Amherst Pierpont. "Aside from just the reality of a tough regulatory environment, I think there was a fear of the unknown. I think there was a perception in the business community, and people can debate whether it was merited or not, that they were subject to what were considered arbitrary, adverse regulatory decisions. So I think there was a hunkering down."

Stanley said since the election, attitudes improved and now with tax law changes, he anticipates a pick up in business spending over the next several years.

While growth did come close to 3 percent for three quarters in a row ending in 2015, Stanley said that period was more typical with growth varying more, with higher peaks and lower valleys in the growth rate. On absolute levels, the last time three quarters each had 3 percent or more growth was in the period ending in the first quarter of 2005.

Growth was 3.2 percent in the third quarter of 2017, and 3.1 percent in the second quarter. Fourth quarter GDP is reported on Jan. 26.

"It certainly is the best economy of this cycle. It's the strongest we've seen. We had been averaging around 2 percent. It is unusual to get three [3 percent] in a row because typically you get get big swings. I think what you're seeing for the first time in the expansion is growth that's being driven by all the key components," he said.

Stanley said growth in prior quarters was impacted by swings in inventories or trade. "When the string is broken, it's going to be one of those categories rather than demand falling apart," he said.

The question also is what will happen in the first quarter, which has been traditionally slow growing and is vulnerable to weakness from weather impacts.

Barclays chief U.S. economist Michael Gapen said he raised his tracking GDP estimate for the fourth quarter to 3 percent from 2.6 percent.

Retail sales for December rose 0.4 percent, and November sales were revised to a gain of 0.9 percent from an increase of 0.8 percent. Sales, excluding autos and gas, were revised higher by a tenth to 0.5 percent for October and 0.4 to 1.2 percent in November.

"There were solid upward revisions to core retail sales. We were tracking 3.1 on consumption [for the quarter] going into the release, and we're tracking 3.6 percent coming out of it," he said.

LaVorgna notes his forecast is an outlier, but he says the fourth quarter could even hit as high as 5 percent, and he sees the 3 percent pace continuing into 2018.

"What's hurting us for the year was weak Q1. Three of the last four years, the first quarter has been weak. That's one thing that I see tempering 2018 is the residual problem of Q1," LaVorgna said.

"My guess is the optimism is going to continue. My big fear is what the Fed is going to do in reaction to it," he said.
https://www.cnbc.com/2018/01/12/tru...th-pace-unlike-anything-seen-in-13-years.html

Some positive news, the economy is growing at a rapid and sustained pace and it is partially credited to this administration.

 

[abiG]

And what does that mean in 13 more... or one even?

Stop focusing on the wrong part of the story.. Trump (or any President for that matter) has not a damned thing to do with the economy.

 

[InternetHero]

I think credit is due.

Trump is an economics guy, he ought to deliver on economics.

That said, it is the other 49 out of 52 areas I am much more concerned about.

 

[InternetHero]

And what does that mean in 13 more... or one even?

Stop focusing on the wrong part of the story.. Trump (or any President for that matter) has not a damned thing to do with the economy.

Hmm yes and no from the politics I have seen on the issue.

They seem to have a marginal impact, or can screw things up, but irregardless the blame or credit they receive is politically critical.

If the economy is great in three years and doing YUGE Donald Trump could see a second term.

 

[Neph]

This gives a really good breakdown of the US's current economy.

I'll summarise here, but basically if you are a big business or shareholder you are doing well, but if you are anything else it's not really helping. Trade deficit is worse, wages are flat, workers are still yet to return to the jobs market. On the plus side, the economy is growing and the Dow Jones is soaring, so if you are rich you are definitely getting richer.

1. The economy is growing (mixed - sometimes faster under Obama, sometimes slow under Obama)

2. Dow Jones index on a record run (continual growth under Obama, even further acceleration under Trump)

3. US unemployment rate (trend has continued, neither + or - for Trump)

4. Wages remain flat

5. Labour force participation rates very low

6. Trade deficit is only getting worse

 

[Neph]

Some positive news, the economy is growing at a rapid and sustained pace and it is partially credited to this administration.

Just lastly to add to this, I wouldn't use the term sustained yet. The growth is pretty consistent with the previous administrations and there is outside lag to consider as well.

Long lags
Suppose, for example, that the main thrust of a policy action's effects on the economy is expected to be felt 20 months after the policy action is taken. Then any action chosen to be implemented now would have to be in response not to the economic situation now, but rather the economic situation that is predicted to prevail 20 months from now; since economic prediction is very difficult, active use of monetary or fiscal policy could actually have a destabilizing effect, an example of the law of unintended consequences.

I'm not saying that he won't lead to sustainable growth, I'm simply saying that it isn't evident yet.

 

[bobgeese]

And what does that mean in 13 more... or one even?

Stop focusing on the wrong part of the story.. Trump (or any President for that matter) has not a damned thing to do with the economy.

You realize there were hundreds of billions of dollars in investments in like the first several months, right? Much of which was directly attributed to Trump, by the people announcing.


You sound tired of winning.

 

[VivaRevolution]

Some positive news, the economy is growing at a rapid and sustained pace and it is partially credited to this administration.

If you can show me wage growth that outpaced inflation for a year, I will call him the greatest economic president since Eisenhower.

As far as I can tell wage growth has completely detached from GDP. I will say the same of unemployment. It doesn't seem to have any link to wage growth.

 

[VivaRevolution]

This one:

Inflation is 3%. We need to see wage growth at 3% plus, for years, and we might actually see our middle class grow again.

 

[Neph]

If you can show me wage growth that outpaced inflation for a year, I will call him the greatest economic president since Eisenhower.

As far as I can tell wage growth has completely detached from GDP. I will say the same of unemployment. It doesn't seem to have any link to wage growth.

Current wage growth is 2.8%
Current inflation is 2.4%

So I guess he's the greatest since Eisenhower.

Of course he would share this with Obama who achieved the same regularly throughout his term(s).

This one:

Inflation is 3%. We need to see wage growth at 3% plus, for years, and we might actually see our middle class grow again.

The current inflation rate for the United States is 2.4% for the 12 months ended March 2018, as published on April 11, 2018 by the U.S. Labor Department.

 

[Rematch]

This gives a really good breakdown of the US's current economy.

I'll summarise here, but basically if you are a big business or shareholder you are doing well, but if you are anything else it's not really helping. Trade deficit is worse, wages are flat, workers are still yet to return to the jobs market. On the plus side, the economy is growing and the Dow Jones is soaring, so if you are rich you are definitely getting richer.

1. The economy is growing (mixed - sometimes faster under Obama, sometimes slow under Obama)

2. Dow Jones index on a record run (continual growth under Obama, even further acceleration under Trump)

3. US unemployment rate (trend has continued, neither + or - for Trump)

4. Wages remain flat

5. Labour force participation rates very low

6. Trade deficit is only getting worse

What that tells me is that more Americans should invest.

 

[Quipling]

This is a 3 month old article and, as @JonesBones and @Orgasmo can tell you, that growth has utterly flatlined in the last few months.

 

[luckyshot]

This gives a really good breakdown of the US's current economy.

I'll summarise here, but basically if you are a big business or shareholder you are doing well, but if you are anything else it's not really helping. Trade deficit is worse, wages are flat, workers are still yet to return to the jobs market. On the plus side, the economy is growing and the Dow Jones is soaring, so if you are rich you are definitely getting richer.

1. The economy is growing (mixed - sometimes faster under Obama, sometimes slow under Obama)

2. Dow Jones index on a record run (continual growth under Obama, even further acceleration under Trump)

3. US unemployment rate (trend has continued, neither + or - for Trump)

4. Wages remain flat

5. Labour force participation rates very low

6. Trade deficit is only getting worse

Stop giving all that contextualized data.

It hurts the OP's cherry picked talking point.

 

[Black Helicopters]

And what does that mean in 13 more... or one even?

Stop focusing on the wrong part of the story.. Trump (or any President for that matter) has not a damned thing to do with the economy.

That’s not true, they can pass policies that can harm or help the economy and their words can affect the stock market.

now granted I agree that Trump has little to do with the economy besides making the stock market go up (and down at times) and he probably will end up hurting the economy with his tariffs

 

[Jack V Savage]

I think credit is due.

Trump is an economics guy, he ought to deliver on economics.

That said, it is the other 49 out of 52 areas I am much more concerned about.

What do you think Trump has done to keep the economy running?

Stop giving all that contextualized data.

It hurts the OP's cherry picked talking point.

As Quipling pointed out, it's also dated. Shows the Dow at 26K, for example, while it's now at 24.3K. Of course, it's not Trump's fault markets have done poorly this year, but the gains last year also had nothing to do with him. As I predicted, the people who were giving him all the credit when the market was booming have gone completely silent on the issue during the slump.

That’s not true, they can pass policies that can harm or help the economy and their words can affect the stock market.

now granted I agree that Trump has little to do with the economy besides making the stock market go up (and down at times) and he probably will end up hurting the economy with his tariffs

Under ordinary circumstances, presidents have very little to do with the economy, especially in the short term. If we had a president push, say, borrowing to pay for infrastructure improvements, the increased spending might be canceled out by higher borrowing costs and decreased private spending. And if not, the Fed would probably cancel out any boost by raising rates. In the long run, the infrastructure improvements might lead to higher real growth.

 

[44nutman]

So if the economy is doing so well, why did Trump add 2 trillion to the debt?

 

[Neph]

As Quipling pointed out, it's also dated. Shows the Dow at 26K, for example, while it's now at 24.3K. Of course, it's not Trump's fault markets have done poorly this year, but the gains last year also had nothing to do with him. As I predicted, the people who were giving him all the credit when the market was booming have gone completely silent on the issue during the slump.

Data from the last quarter is very current in economics. The rest of the comments I of course agree with completely

 

[Jack V Savage]

Data from the last quarter is very current in economics. The rest of the comments I of course agree with completely

Well, there's a lag in data (and a longer lag for more-reliable data). But that lag applies to the data collected in January, too.

Anyway, it's a minor quibble (and I have some others with the data presentation). The economy is doing quite well now. It's just silly and hackish to attribute any of it to the president, especially one who just took office less than two years ago and hasn't done anything significant that would affect the economy.

 

[Quipling]

What do you think Trump has done to keep the economy running?

As Quipling pointed out, it's also dated. Shows the Dow at 26K, for example, while it's now at 24.3K. Of course, it's not Trump's fault markets have done poorly this year, but the gains last year also had nothing to do with him. As I predicted, the people who were giving him all the credit when the market was booming have gone completely silent on the issue during the slump.

Technically, your prediction was a bit wrong.

@Son of Jamin hasn't gone silent at all. Instead, through some miracle of blinkered cheerleading, he's giving credit to Trump for a previously booming market while ignoring that the market is currently slumping.

 

[cincymma79]

When the economy does well it’s because of obama. When there’s a downturn it’s becuae of trump. When it goes back up again ya becuase of obama