March 25, 2019

New Year, New Economy

“When watching an unusually exciting football game, I sometimes push the mute button so that I can concentrate on the action on the field. At times, noisy commentary and crowds becloud the game itself, causing one to miss out on some of the more subtle field action.

This is how I feel as I seek to assess the 2019 U.S. economic outlook. There are so many tweets and so much noisy commentary that one can lose sight of what the real economy is doing. It’s time to hit the mute button and see what the facts have to say about 2019’s prospects.

First off, let’s consider economic growth.

As of December, 2018’s real GDP growth seems headed toward 3.0 percent for the year or slightly better. This compares strikingly with 2016’s 1.6 percent and 2017’s 2.2 percent. Driven favorably by tax cuts, relief from regulation, and recently falling energy prices, the trend is definitely positive.

Perhaps more importantly, real per-capita GDP growth is recovering from a recent weak spell, running at 2.3 percent in 2018’s third quarter versus less than 1 percent at the same time in 2016. With some positive wage growth, that proverbial average person is getting better off.”

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