U.S. Outlook: The 2018 U.S. GDP victory rings hollow
Fourth quarter GDP growth beat economists’ expectations, coming in at 2.6% annualized, giving the Trump administration a reason to celebrate four quarters of 3.0% plus growth, a new expansion record.
The administration sold the 2018 Tax Cuts and Jobs Act by promising 3.0%-plus GDP growth over the coming decade, and at least over the first four quarters since passage, the economy managed to hit the mark. Don’t expect a repeat performance.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on March 1.Key observations:
- The GDP growth lift from the fourth quarter of 2017 is only 0.6 percentage points of GDP, or just over $100 billion in added spending and production.
- While year-on-year growth hit a new expansion high of 3.1% in the fourth quarter, sequential GDP growth peaked in the first quarter after passage of the Tax Cuts and Jobs Act at 4.2%.
- Since then, GDP growth has decelerated for two consecutive quarters to a much less heady 2.6% and our early estimate of Q1 2019 growth is only 1.5% annualized.
- If realized, the first quarter of 2019 could be the slowest quarterly growth performance for the U.S. economy since the first quarter of 2016.