Econ growth, A 2017 love story...
Bottom Line: The economy has been performing the best it's performed in at least 12 years over the past eight months (approximately). It's exciting for all of the obvious reasons...Employment, wage growth, entrepreneurship & innovation, investments, etc. While we haven't had a full year of 3% plus growth in the US economy sustained, since 2005, it's easy to forget what changes meaningfully with that type of economy. As a reminder here's the difference...
1% growth economy: One that's at imminent risk of recession if any negative catalyst arises, doesn't create enough employment opportunity to allow for progress to be made due to population growth. Wage growth doesn't keep up with inflation
2% growth economy: An economy that's able to make marginal progress. A 2% growth economy generally produces enough jobs to just exceed population growth & demand over time however doesn't create demand for labor resulting in wages that often aren't able to keep up with inflation
3% growth economy: An economy that's producing more than enough jobs to keep pace with population, resulting in demand for labor, upward mobility among skilled employees, a tight labor market that puts upward pressure on wages creating income growth that often allows employees to improve quality of life by improving income above the rate of inflation
The average US economic growth rate is 3.1%, yet the last year we saw it was 2005. During the eight years of the Obama administration we averaged growth of only 1.8%. The worst in US history for any eight-year period under any administration. Through the first three quarters of 2016 the economic growth rate was...You guessed it. 1.87%
So how much better are we performing year over year? 2017's growth rate for the first nine months:
2.53%...A 35% improvement in economic growth rate and an economic dilatation above the previous economy. What's more is that figure includes the first quarter which didn't include the impact of the Trump administration's regulatory changes. The growth rate for the two full quarters under this administration is 3.2%. That's nearly two tiers of improvement year over year and above the US historic average. You might say that we're fortunate to have an economy that's being made great again...