U.S. Economy Slowed at Year’s End, Unable to Sustain 3 Percent Growth

WASHINGTON (Los Angeles Times/TNS) -
Chart showing trend in U.S. GDP. (TNS 2018)

The U.S. economy slowed at the end of last year, once again unable to sustain 3 percent growth for very long in a trend that has plagued the recovery from the Great Recession.

The 2.6 percent figure for the October-December period reported Friday by the Commerce Department — the first of three estimates in the coming weeks — was down from 3.2 percent in the previous quarter and below analyst expectations.

Still, it marked another solid quarter in one of the longest economic expansions in U.S. history, even if it fell short of President Donald Trump’s promise of much faster growth because of his polices.

Total economic output, also known as gross domestic product, had expanded at more than a 3 percent annual rate for two straight quarters. U.S. economic growth hasn’t exceeded 3 percent in three consecutive quarters since 2004-05.

In the wake of that, President Trump had boasted that his administration’s policies had reversed the sluggish growth of about 2 percent that had marked the years since the Great Recession ended in 2009.

“The economy now has hit 3 percent,” Trump told reporters last month. “Nobody thought it would be anywhere close. I think we could go to 4, 5 or even 6 percent, ultimately.”

Economist said it takes months for a new administration to affect the economy and that much of 2017’s performance, including continued strong job growth, was attributed to former President Barack Obama’s policies.

But President Trump has argued that his election in November 2016 began boosting the economy even before he took office as business and consumer confidence rose in anticipation of his pro-growth policies.

Those include reducing regulations and pushing through a tax bill at the end of last year centered on large corporate tax cuts.

The Commerce Department said the economy expanded 2.3 percent in 2017. That was a significant improvement over the previous year’s 1.5 percent growth. But it was below the 2.9 percent recorded in 2015.

Economic growth stumbled a bit in the fourth quarter of last year as the biggest increase in consumer spending in more than a year was offset by less business investment and a large jump in imports.

Despite Trump’s premise that he had already engineered a major economic turnaround, 2017 continued the sluggish sub-3 percent growth of the Great Recession.

Trump and Republicans have noted that Obama’s administration was the first in U.S. history that never produced at least one year of 3 percent growth.

Though it’s true that under Obama the U.S. economy never had a calendar year of 3 percent growth as it dealt with the aftermath of the Great Recession, his administration did preside over three 12-month periods in which growth exceeded that level.

Those periods were from October 2009-September 2010 and two overlapping periods from 2014-15.

The tax cuts enacted by Congress last month are expected to boost growth this year, but not above 3 percent. The International Monetary Fund last week projected that the U.S. economy would expand 2.7 percent this year and 2.5 percent in 2019.

Last month, Federal Reserve policymakers forecast the U.S. economy would grow 2.5 percent this year but decline to 2.1 percent in 2019.