There is No Economic Boom in Sight

posted by Robert Shapiro on June 9, 2018 - 9:26am

President Trump, as usual, gave himself the credit for the latest jobs report, and while his policies had little to do with rising jobs, the numbers were certainly good. But he had nothing to say about the other two big economic reports issued last week on GDP and personal incomes. In a new essay today in The Hill, I explain his wholly uncharacteristic reticence. GDP grew at just a 2.2 percent rate in the first quarter of 2018, the third consecutive quarter of steadily slowing economic growth. Consumer spending was nearly flat, house sales dropped, and the gains in business investment tells us the big tax cut did little to boost investment. More important, wage and salary growth slowed, as did corporate profits – but shareholders can rest easy, since Trump's tax changes sharply cut the tax on those profits. Jobs have kept on growing at the healthy rates we've seen for four years -- but remember, employment is a "lagging indicator." Consumption, home sales, and personal incomes are forward indicators, and they point to a weakening economy vulnerable to any real shock that comes along.

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