First quarter US growth statistics are in and the United States economy grew by 2.2 percent of GDP in the first quarter of 2018. Economists had initially predicted growth to be at 2.3 percent, this means that their numbers had to be revised downward to 2.2 percent.
Economic growth in the United States dropped due to a combination of different factors and variables. One reason for the slowdown was a significant drop in year on year consumer and business spending. This means that spending in these areas was down when compared to the previous year.
An additional factor that kneecapped growth was the severe winter storms across the United States. This depressed travel demand while also damaging or destroying a great deal of efficiency generating infrastructure.
The Department of Commerce planned for 2.3 percent growth, so the actual result is not that far off. Their justification for taking off 0.1 off of their growth numbers was due to new information added to their analysis of the quarter. Changing their numbers to be lower reflected inventory concerns and issues in the housing market. These changes were somewhat diminished due to robust investment in the business development market.
Analysts are still expecting US GDP growth to hit 3% by the second quarter. The goal of 3% is the target that Donald Trump set for US economic growth and backed up by economists hired by the White House. Three percent is .01 percent higher than the fourth quarter growth numbers of 2.9. Any uptick in growth in generally welcomed by politicians and Donald Trump is no exception to this iron rule of politics.
Trump, alongside his Republican allies in Congress, have claimed that tax cuts and lessened regulation are to credit for the recent uptick in economic activity. They credit rolling back health and environmental regulations put in place during the Obama years with increasing economic growth. They are counting on continued and sustained economic growth until the midterm elections happen in November.
The tax cuts enacted earlier this year totaled roughly 1.5 trillion dollars. In addition, Trump and Republicans drastically increased domestic spending. This should give us solid economic growth for the next few years but economists are predicting a downturn to begin sometime in 2021 or 2022.