Friday's GDP Report Illuminates Trump's Broken Promises On The Economy

Last Friday's Q2 GDP report probably did more to expose the failures of Trump's economic agenda than any other piece of economic data in his Presidency. First, growth for the quarter came in at 2.1%, far below the White House's annual projections of 3%. To hit 3% for 2019, growth in the second half of this year will have to average around 3.4%, something extremely implausible given current estimates are at just 2%. Second, economic growth in 2018 was revised significantly downward, from 3% to 2.5%. As a result, the economy last year never came close to hitting Trump's promise of 3% growth, even with a $1.8 trillion tax cut for the rich. Finally, business investment came in negative for the second quarter, and was revised significantly lower for 2018, further dismantling Trump's promise that the tax cut would spur a surge in investment. Instead, the trend in business investment has actually fallen since the tax cut went into force in early 2018. 

What has been the long-term result, then, of Trump's economic agenda of tax cuts, tariffs, and deregulation that was promised to lead to 3% annual growth every year into 2028? Quite simply, nothing. Growth has averaged 2.1% over the past 3 quarters, and is projected by the Fed to be 2.1% for 2019 as a whole and 2% for 2020, a little bit slower than the 2.3% annual average during Obama's second term. The only difference is that Trump has ballooned the budget deficit, from $580 billion in 2016 to over $1 trillion projected for this year, to give handouts to the rich all the while trying to strip healthcare and food stamps from the poor. 

Weekly Notes On The Economy is a weekly column that NDN writes on the most recent economic news, policy, and data.