Part 2 - Inside the GDP Report – what's going on in our economy

posted by Brian Mudd -

Part 2 - Inside the GDP Report – what's going on in our economy and what it means to you 

Bottom Line: In the first part of today's GDP story I illustrated a few meaningful highlights on back Friday's Q1 GDP report. They included: 

  • 2.9% growth for the first full year of the Trump administration 

  • Economic growth that was 61% better than the average of the Obama years 

  • 1st quarter is historically the slowest growth quarter of the year for our economy 

It's that last point that I want to pick up on here. First, here's the average 1st quarter:

  • GDP growth rate of the prior eight years (2010-2017 – Post-recession Obama years): 1.5% 

  • The recent trend line (prior two years): .9% 

So, in the context of the prior administration and recent trend line that 2.3% growth we posted looks pretty great. Especially when you consider what it potentially sets us up for going forward. I'd mentioned that the first quarter is historically the slowest growth month of the year. Consider this recent trend.  

  • In 2016 the first quarter growth rate was ,6% but the growth rate of the final three quarters average 2.3%. 
  • In 2017 the q1 growth rate was 1.2% and the average growth rate of the final three quarters was 3.1%.  

If this trend line continues we're looking at a 3.5% growth economy the rest of the way in 2018 which would place us over 3% for the year. An already strong economy and jobs market would doubtless lead to big gains in those who've not participated in the improved economy and continued significant wage gains as well. As a reminder here's my breakdown of the difference in an economy based on growth rate... 

1%: Imminent risk of recession if the economy wobbles at all. Not enough jobs being created to make real improvement in the unemployment rate. Stagnant wage growth 

2%: Status quo economy. Growing just enough jobs to make marginal progress in employment but with low wage growth 

3%+: Growing more than enough jobs to improve the unemployment rate & meaningful wage growth  

After one full year of the Trump administration we're kissing that 3% figure and turned in the best four quarter of US economic growth since 2005.  

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