The U.S. Commerce Department’s blockbuster news, that the economy grew by a stunning 3.2 percent in the first quarter, is good news for everybody unless you’re one of the two dozen Democrats running for president. A little bipartisan celebration of the news is in order.
The economic growth accelerated in the first quarter with a boost from inventories and trade off-setting a decline in consumer and business spending. The 3.2 percent growth in gross domestic product exceeded forecasts in a Bloomberg News survey that put expectations at 2.2 percent, and that followed a 2.2 percent advance in the previous quarter. The numbers are all the more remarkable, considering the partial government shutdown that began the year, which was expected to dampen economic growth.
The economy is surging because both American consumers and businesses, feeling confident, are opening their wallets. “U.S. consumer spending increased by the most in more than 9-1/2 years in March,” reported Reuters this week. That’s key, given that domestic spending constitutes approximately 70 percent of U.S gross domestic product. The Federal Reserve is unlikely to raise interest rates, which would hamper growth. Stable prices mean stable consumers.
American businesses are investing. “Orders for long-lasting durable goods posted the biggest increase in March since last summer, potentially signaling a rebound in the slower-growing industrial side of the economy,” observes MarketWatch, the financial website. “Durable-goods orders leaped 2.7 percent last month, led by stronger demand for autos, planes and networking equipment. Economists surveyed by MarketWatch had forecast a 0.5 percent increase.” Consumer businesses are stockpiling inventory to be ready to satisfy appetites of consumers feeling flush.
The Trump administration’s tax cuts, which put money in pocketbooks, obviously had something to do with the surge. The stock market has rebounded after a swoon a couple of months ago, meaning portfolios and retirement plans are fatter now, too.
The job market is in excellent shape. The national unemployment rate stands at 3.8 percent, suggesting that full employment is at hand. Just about every American who wants a job is all but assured of finding one. After years of stagnation, wages are rising. “Median base pay for full-time workers rose 1.4 percent in March from the same period last year compared with a 1.3 percent rise in February, Bloomberg News reported. The robots said to be on the way to take everybody’s job have clearly not yet arrived.
This economic era of good feelings is great political news for President Trump, who will campaign on his stewardship of the economy when he makes his pitch for a second term. This puts the dozens of Democrats running for president in a tough spot. They don’t want to root for bad news, of course, at least not in public. But it will be harder to portray the president as an economic incompetent when most Americans see the numbers, and know better. Tax cuts, deregulation and renegotiated trade is working. This is all the more remarkable given how many “experts” predicted economic catastrophe on the morning after the 2016 election. The president is entitled to join the rest of us in raising a glass of the bubbly.
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