America’s latest Gross Domestic Product (GDP) number was released Friday by the Commerce Department showing 4.1 percent growth in the second quarter, putting the U.S. on track for an impressive year in economic expansion.
It’s only a quarter so we shouldn’t get crazy, but let’s give a little credit where it’s due. These are the best numbers since 2014 and the U.S. economy is currently in the midst what looks to be the longest period of GDP growth in a full decade.
Naysayers will argue the current pace of economic growth is not sustainable, it was due to government spending, soybean exports ahead of proposed tariffs and was propped up. They will say the “experts” all think there will be a drop next report.
Depending on which TV news network one has on while enjoying their morning coffee, it may sound a bit bleaker. Political pundits will bring on experts, grab opinion polls and explain why such growth is unsustainable and how the average American does not see the benefits of a “great economy.”
Others may prophesize about a looming trade war and if that doesn’t kill us the sky that is certainly falling will.
Let’s call a spade a spade: The unemployment rate is at an 18-year low — African Americans, Hispanics, women and veterans are currently employed at some of the highest rates ever recorded — 3.7 million jobs have been created since President Trump took office including 400,000 manufacturing jobs, and worker wages are rising at the highest rate since mid-2008.
Tax cuts, trade policy, slashing regulations on corporate America while simultaneously rolling out economic incentives to both bring money back and to invest domestically, all undeniably contributed to the latest government report.
We cannot ignore some other factors as well, such as a White House energy plan that has increased U.S. production while cutting foreign dependence, putting America on track to become a net exporter of oil and gas by 2022. Trump has also made peace with European Commission President Jean-Claude Juncker calming global nerves about a trade war with the EU.
The administration additionally reported successfully dropping $50 billion in trade deficits.
“We were abused by countries themselves, even allies,” Trump said Friday. “We were abused like no country had ever been abused on trade before. They stole our jobs and plundered our wealth. But that ended.”
NAFTA is also slated for renegotiation as part of Trump’s “America First” agenda. Overall, this is a multi-tiered approach that seems to be boosting consumer confidence and creating jobs at an undeniably torrid pace. The president’s economic plan, at least for now, seems to have been a catalyst for a boom that not many people outside of the White House ever saw coming.
The next U.S. economic report will be released just before the November midterms, and may be one of the biggest factors determining if Republicans retain majority control of Congress. If Q3 numbers are bad there is not a Russian hacker in the world that can deliver the House for the GOP.
On the other hand, if growth continues it will be seen as a mandate to continue the unleashing the American economy and may be problematic for the so-called “blue wave.”
One last thought to chew on: Don’t be shocked if Republicans move for additional tax cuts before the midterms. Why? Because it will force everyone to pick a side on tax policy right before the people vote. As goes the economy, so goes the Congress.
[CNBC] [CNNMoney] [The Hill] [Photo courtesy Black Business Journal]