2018's economy is set to be the best in well over a decade:
Bottom Line: We've been through a lot economically over the past decade. The Great Recession, the slowest economic growth following a recession in American history (1.8%) for eight years and the longest period of time without at least 3% growth (12 years). You get the idea.
The last full year for average US economic growth (3%) was 2005 and for average wage growth was 2007. Not only is 2018 shaping up to be the year that the US economy checks off all of those boxes, Goldman Sachs thinks that the economy could surprise on the upside (80% chance of 3% economic growth this year). It makes sense. Who saw 3% plus growth happening so soon last year prior to major reforms on healthcare and taxes? Who saw any chance of sustaining it after the hurricanes that negatively impacted about a fifth of our economy?
I've mentioned that this past fall was the best time to make your case for a raise to your employer because the surprisingly good economy has brought record profits with it that should translate to the best raises in over a decade entering 2018. We've seen that happen through a series of raises and bonuses being paid out that were the best in over a decade in December (driven heavily by the new tax cuts).
With consumer spending accounting for about 70% of the US economy that should translate into even more economic momentum when the impact of all of this additional money kicks in. In another story today, I've shown that the average person will have more than 7% additional income through raises, bonuses and tax cuts compared to a year ago. That's where the next leg in economic growth can and to needs to come from if we're going to have a great 2018. Companies reinvesting, increasing spending and ramping up hiring was the economic driver of 2017. You're the economic story of 2018 waiting to happen. Cheers! This could be and should be a great year!