The economy is humming along, having grown at an average inflation-adjusted annual rate of just over 2% over the last four quarters. But it is projected to have grown more slowly this year than the 2.9% expansion in 2018. Still, a CNN poll conducted in mid-December found that 76% of adults say economic conditions are very or somewhat good, the highest share to say so since February 2001. And 68% say they expect the economy to be healthy a year from now, the highest since the end of 2003. President Trump’s re-election prospects may be riding on it.
Trump has repeatedly called this “The Greatest Economy in American History!” Can you spot the inflection point since he took office?
The unemployment rate, at 3.5%, is at a 50-year low. The economy has continued to add jobs, though at a slower rate than in 2018.
And wage growth has picked up, especially for low-wage workers.
Even as the economy continues to grow, tax receipts have fallen as a share of gross domestic product, while federal spending has edged higher — and is set to jump in the years ahead.
Corporate tax revenues have fallen significantly since the 2017 Republican tax law cut rates.
Meanwhile, business investment has not seen the promised boost since the tax cuts were enacted.
The federal budget deficit is set to surpass $1 trillion this year — unusual for a time of economic growth.
And policymakers are adding to it. Legislation enacted by Congress and President Trump in 2019 added $2.2 trillion to the projected debt over the next decade — and that’s on top of the deficit-raising impact of the 2017 tax cuts.
Fiscal policy is boosting growth. Tax and spending policies across the federal, state and local levels boosted growth by 0.5 percentage points in the third quarter of 2019, according to the Hutchins Center on Fiscal and Monetary Policy. Federal spending is projected to lift GDP by about 0.11 percentage points in the current fiscal year.