Part 1: Econ 4.1 - Cutting through the BS. What it all means to you
Bottom Line: On Friday I setup the GDP Report with a story breaking down what economic growth really means to you beyond the numbers. If you missed it here's a quick refresher.
1%: An economy that's at imminent risk of recession and doesn't create enough jobs to support population growth
2%: The status-quo economy. Creates just enough new opportunity to make slow employment progress but generally not enough to spur wage growth
3%: An economy that creates more jobs than population growth produces demand for them, produces meaningful wage growth
The secret of the success of the United States is that our growth rate has averaged 3.1% for its history. That's why despite recessions, wars and tumult every generation has always fared better than the one before it and it's how the US economy became the largest in the world in under 150 years. The issue for current generation of young adults is that our country hadn't been delivering on its promise or potential. The last calendar year we had average growth was 2005.
Unfortunately, in this highly politicized environment, even economic reports are immediately spun. President Trump predictably took a victory lap – which frankly he's entitled to do given how much misinformation (about what the impact of his agenda to eliminate onerous regulations and pass tax reform would do to spur economic growth) was perpetuated about his agenda throughout his first year in office that we're now fully reaping the benefits of top to bottom throughout the country. And conversely, the President's political opponents on the left and allies in the media were busy trying to say that the economic report wasn't really all it was cracked up to be because there was a race to buy stuff due to coming tariffs. In fact, when you heard reporting that the 4.1% growth rate was the fastest since 2014. That's extremely misleading. There's nothing that's similar about today's economy and what happened in 2014. The reason we had a temporary growth above 4% in 2014 was because the economy literally shrunk – receded - by 1% in the first quarter of that year. What we have this year is a growing economy that accelerated to new highs in the second quarter. That's vastly different than a quick bounce back from a declining economy. That's why nothing that happened in 2014 felt the way that this economy feels. There's simply no comparison.
As I'm inclined to say...there are two sides to stories and one side to facts. In the second part of today's story I'll break it down.