Inside the real economy. What the 2.6% 2nd quarter growth rate means to you

Inside the real economy...What the 2.6% second quarter growth rate means to you:

Bottom Line: There are a couple of quick obvious takes from the 2nd quarter GDP report that we received on Friday. First, the economy has accelerated for the first half of 2017, compared to the same time in 2016. Second, 3%+ economic growth for a full year is absolutely attainable with improved policy out of Washington. There's more to the story that's specific to you but first here's the year over year economic improvement:

  • 1st quarter: 2016: .6% growth compared to 1.2% in 2017
  • 2nd quarter: 2016: 2.2% growth compared to 2.6% in 2017

So through the first half of 2016 we were pacing anemic 1.4% economic growth. Through the first half of 2017 we're pacing weak economic growth of 1.9%. So a couple of points real quickly...The average US economic growth rate of President Obama's eight years was a paltry 1.8%. So if the 1.9% growth rate held, we'd actually be marginally better off than we've been over the past eight years. More importantly, though we're seeing an expansion in economic growth through the 2nd quarter and a clear path towards 3%+ growth. here's why that matters to you... 

In my analysis, (and view) of the economy, there are three critical economic growth levels that project what we can expect economically in United States.  They are…  The 1% growth economy, the 2% growth economy and the 3+% growth economy.

  • The 1% growth economy is one which places the economy at imminent risk of recession and isn’t producing new employment or income growth
  • The 2% growth economy that is treading water.  This economy will generally only keep pace with inflation making it difficult to achieve upward mobility in employment and income growth
  • The 3%+ growth economy, which if sustained, produces a steady stream of new employment opportunities and significant opportunity for income growth

With the solid 2nd quarter GDP Report, it's clear that if we were to have meaningfully positive reforms on healthcare and/or taxes that would result in more money in your pocket - we'd have a path towards 3%+ growth. In the 2nd quarter income growth averaged 2.5% and we had a 2.6%+ growth economy. It's not complicated. Consumer spending is 70%+ of the US economy. More money coming into to you equals more of it positively impacting the economy. 

The last year we had 3%+ growth was 2005 and yet 3.1% growth is still the average US economic growth rate. It's not possible with European style socialistic economic polices and Obama like regulations but it's absolutely possible with a return to American style free market principals.  We've already seen what simply rolling back over-zealous regulations on business can do for the economy. Now if we could only get the legislative reforms needed to put more of the US economy in our hands rather than the bureaucrats in Washington...

Brian Mudd

Brian Mudd

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