Robert Romano: 4.1 Percent Growth Is Magic Number For 2Q 2018 GDP

Can the economy hit it?

by ROBERT ROMANO || When President Donald Trump stood for election in 2016, he set a national goal of getting the U.S. economy to grow at four percent annually, and maybe even greater than that.

Speaking to the Economic Club of New York on September 15, 2016, Trump said, “it’s time to establish a national goal of reaching 4 percent of economic growth. And my great economists don’t want me to say this but I think we can do better than that.”

It’s a good goal for the nation to have.  The economy has not grown above an inflation-adjusted four percent since 2000, and not above three percent since 2005.

Which makes it good news that the Atlanta Federal Reserve is projecting 4.8 percent growth annualized for the second quarter of this year.

The American people would be happy just to get to three percent, but in 2017 the economy fell short, only growing at 2.3 percent.

And in the first quarter of 2018, it is only grew at 2.2 percent annualized.

That means to get back on track for 2018 with a target of above three percent, the economy will need to grow at 4.1 percent annualized in the second quarter, according to an analysis of U.S. Bureau of Economic Analysis (BEA) data.  After that, it can grow at three percent annualized in the last two quarters, and then the U.S. will hit that three percent number.

[timed-content-server show=’2018-Jan-17 00:00:00′ hide=’2018-Jul-31 00:00:00′]



To project to a four percent annual growth for the year (presuming growth of four percent annualized), the second quarter would need to see growth of 8.5 percent annualized.

All this underscores the critical importance of the first quarter in determining the annual number.  It all averages out in the end, but gaining momentum early is very important to building growth.

Contributing factors include a rapidly growing labor force – with more people working and looking for work – and therefore participating in the economy. Surely the individual and corporate taxes, plus deregulation and putting America first on trade, is helping to get Americans back to work – but even then, exigent factors have a way of asserting themselves.

The economy, being the free choices of hundreds of millions of people not just in the U.S. but overseas, does not always cooperate, even when you have good policies.

In 1981, President Ronald Reagan enacted his tax cuts, among the largest in modern history, and you know what happened in 1982?  Interest rates were still really high, although dropping as the 1970s inflation was still being squeezed out of the economy, and the result was one of the worst recessions in modern history, shrinking at 1.9 percent.

After that, though, it was off to the races. The economy grew at 4.6 percent in 1983, 7.3 percent in 1984 and 4.2 percent in 1985.

So, we’ve seen the U.S. economy bounce back from stagnation before. We hope it happens soon, but sometimes these things take time. As usual, stay tuned.

Robert Romano is the Vice President of Public Policy at Americans for Limited Government.  His column, reprinted with permission, originally appeared on The Daily Torch.


Related posts


Prioleau Alexander: The Pizza Man Cometh

E Prioleau Alexander

Port Of Charleston Reopens After ‘Software Issue’

Will Folks

Joe Biden Drains America’s Petroleum Reserves … Again

Will Folks

Leave a Comment