I agree with Paul Krugman’s assessment in his New York Times column of the announcement of 4.1% GDP growth in the second quarter. You can’t tell a great deal from it:
So does 2nd quarter growth say anything at all about the Trump economic agenda? The tax cut probably helped give the economy a bit of a bump: massive deficit spending will do that.
I do have a quibble with it. Does “massive deficit spending” increase GDP if aggregate product has already reached potential? And Bret Stephens makes a good point in his column:
No, the growth isn’t evenly distributed. It hasn’t shown up in wages. It shouldn’t excuse the president’s trade follies. It doesn’t mean the next quarter will be as good. And it never means that storm clouds aren’t brewing.
But if you’re serious about wanting to defeat Trump, you might want to start with Rule No. 1: Don’t argue with sunshine. Don’t acknowledge good news through gritted teeth, or chortle at the president’s boastful delivery, or content yourself with the thought that Barack Obama also had some strong quarters and deserves all the credit.
4.1% is better than contraction, no growth, or the sluggish grow we’ve had for the last ten years. So, rather than pointing out that one quarter doth not a trend make or that Obama could have done the same thing but for those nasty Republicans, celebrate the good.
Under-reported has been the drawdown in inventories estimated at 1% of GDP. There is a built in cushion for Q3.
BTW – did Krugman explain why massive deficit spending during Obama’s years produced such modest results?
He also didn’t explain why he opposed deficit spending during the recession of the early Aughts and supported it as soon as a Democrat became president.
It is good news; but let’s not get ahead of ourselves. If the US can grow 3% for 1 year along with good wage gains; then I feel confident something has really changed.
“Under-reported has been the drawdown in inventories estimated at 1% of GDP. There is a built in cushion for Q3.”
There was a lot of reporting about sales being advanced to avoid tariffs, which would decrease inventories.
“He also didn’t explain why he opposed deficit spending during the recession of the early Aughts ”
He did. Not sure i have the energy to go find it, but in short, what Bush did was cut taxes. I think you mislead by saying deficit spending. Phrase it like “tax cut induced deficits” and it is easy to understand.
“did Krugman explain why massive deficit spending during Obama’s years produced such modest results?”
Yes. Like many other economists he spent some time on the Rinehart and Rogoff book which looked back at hundreds of recessions and found that after an international banking crisis we usually have 5-8 years of slow growth.
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It is good news; but let’s not get ahead of ourselves. If the US can grow 3% for 1 year along with good wage gains; then I feel confident something has really changed.”
You just did what Stephens said we should not do. When Trump say growth is unprecedented it us unfair to point out it is not true. When he says the 4.1% growth is best in a long, long time, it is unfair to point out that it is just one quarter and it doesn’t make it into the top 10 for the 2000s. Just grin an dear and tell the Trump fans like Drew that his guy is the bestest.
Steve
Well the argument will not be resolved for years; well after the next recession has started.
My view could be summarized by “great kid, but don’t get cockyâ€. Or similar to how I viewed Trump getting no honeymoon after becoming President; he can get his honeymoon after he delivers results.