Friday's GDP Report on the surface was a meh kinda number. At 2.3% growth for the first quarter it was much better than expectations of economists (which averaged 1.8%) but not that magic bean of 3%.
So, what does it mean and should you even care?
Economic growth from quarter to quarter isn't something that can or should be taken in a vacuum. There are seasonal effects (historically the 1st quarter is the slowest growth quarter of the year for our economy), impacts of seasonality (like lower consumer spending growth due to a record setting fourth quarter for consumer spending in the 4th quarter of last year along with record setting snowfall in parts of the country in the 1st this year). But put it all in context and it tells a complete story. Here's that complete story.
The 1st quarter GDP report gives us a look at one full year of the Trump economy and we now know what that year produced economically. Growth that averaged 2.9% for the year (from the 2nd quarter of 2017 – the first quarter of 2018). We literally were .1% away from the economy that economists said couldn't be achieved in the US any longer. For additional context the average of the Obama years was economic growth 1.8%. In other words, in year one of the Trump administration the economy grew at a pace that was 61% faster than that of what we'd become accustomed to in this country. But that's still not the most impressive part of this story. Yes, if we averaged 2.9% growth for the duration of the Trump administration we would be feeling pretty great economically in this country but there's a lot more potential and momentum than 2.9% coming out of the first full year of the Trump administration and I'll explain in part two.