Growth was 2.1 percent in the final three months of the year, better than economists expected and a sign the economy is not falling into a recession. But it is a pace that has been typical of this decade-long recovery and it was helped by a big decline in imports as companies had rushed to bring in goods from China before Trump’s latest tariffs went into effect in September. Growth was 2.1 percent in the third quarter and 2 percent in the second.
The U.S. economy is largely driven by consumer spending, and American households continued to buy goods and experiences at a steady pace. Numerous polls and surveys show that consumer confidence is high because Americans believe it is easy to get a job and their incomes are likely to stay the same or improve in the coming months.
Government spending has also increased under Trump, providing a boost to economic growth. The deficit neared $1 trillion in 2019, an unprecedented level during good economic times when there is not a major war effort underway. Trump’s tax cuts and additional funding for the military and domestic programs have pushed the gap wider.
Despite the additional government stimulus, Trump has yet to achieve a year of 3 percent economic growth as he vowed before taking office. Trump has repeatedly blamed the Federal Reserve for the shortfall, but most economists say Trump’s escalating trade war and weak growth abroad were major drag on the economy last year. The ongoing fallout at Boeing after the two 737 Max plane crashes also dampened growth since Boeing is usually the largest U.S. exporter but orders dried up after the tragedies.
“The United States is by far the strongest economic power in the world,” Trump said in a speech last week at the World Economic Forum in Davos, Switzerland. “It’s despite the fact that the Fed has raised rates too fast and lowered them too slowly.”
But economists point out that companies have a lot of cash on hand and the Fed has set interest rates at relatively low levels, meaning firms aren’t struggling for money right now. Instead, business confidence plummeted over the summer as Trump escalated his trade war with China and threatened to hit Mexico with extensive tariffs. Business investment outside of housing shrank 1.5 percent in the fourth quarter, 2.3 percent in the third quarter and 1 percent in the second quarter of last year.
Trump has frequently boasted about the economy’s performance since his election. Growth so far during his tenure in office has exceeded the average under President Obama’s and President George W. Bush’s first or second terms, but it is not unprecedented growth. Growth under President Clinton and President Reagan both exceeded Trump’s average so far.
Economists caution against giving presidents too much credit for economic growth, but surveys show voters often feel otherwise. Late last year, a Washington Post-ABC News poll found 44 percent of Americans said the economy had improved under Trump, and among that group, nearly 4 in 5 said he deserves at least a good amount of the credit.
Gross Domestic Product represents all of the more than $20 trillion of goods and services produced in the U.S. last year, with adjustments for things like international trade and business inventories. The preliminary estimate released this month is the culmination of a yearlong effort to measure everything from fenders to blenders that U.S. consumers and firms have purchased or produced this year. It will be revised in the coming months as more information rolls in.
https://news.google.com/__i/rss/rd/articles/CBMilgFodHRwczovL3d3dy53YXNoaW5ndG9ucG9zdC5jb20vYnVzaW5lc3MvMjAyMC8wMS8zMC91cy1lY29ub215LWdyZXctMjMtcGVyY2VudC0yMDE5LXNsb3dlc3QtdHJ1bXBzLXByZXNpZGVuY3ktaGVsZC1iYWNrLWJ5LXRyYWRlLWZlYXJzLWdsb2JhbC1zbG93ZG93bi_SAaUBaHR0cHM6Ly93d3cud2FzaGluZ3RvbnBvc3QuY29tL2J1c2luZXNzLzIwMjAvMDEvMzAvdXMtZWNvbm9teS1ncmV3LTIzLXBlcmNlbnQtMjAxOS1zbG93ZXN0LXRydW1wcy1wcmVzaWRlbmN5LWhlbGQtYmFjay1ieS10cmFkZS1mZWFycy1nbG9iYWwtc2xvd2Rvd24vP291dHB1dFR5cGU9YW1w?oc=5
2020-01-30 13:54:00Z
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