Great Again? GDP Growth Slows as the Donald Runs into Reality

by Robert Carbery

 
Looking back on his first 100 days in office, President Trump is realizing that the reality of running the world’s largest economy, biggest and baddest military, and likely most politically divided country in the world right now is much more of a headache than he imagined on the campaign trail.
 
Politics is not real estate and the Donald is coming to terms with how hard it is to actually get things done in the White House, even in the most powerful position on the planet.
As The Hill recently reported, President Trump thought it would be easier than his past business experience.
 
“I loved my previous life. I had so many things going,” Trump said in a recent interview with Reuters. “This is more work than in my previous life. I thought it would be easier.”
 
Wonder why he thought that?
 
Making America Great Again does involve more work than Trump initially thought. It takes a concerted effort to move a country in the right direction. And an even larger push to enact real, lasting change in DC. There are many levers that must be pulled. Many pressures that must be applied. Long standing traditions that must be dispensed with. It is early, but we’ve got a whole quarter in the bag now.
The U.S. economy grew at its weakest first quarter pace in three years during the first quarter of 2017 with gross domestic product increasing at a 0.7% annual rate. This potential setback for President Trump will hopefully focus his efforts on following through with his many promises to boost growth. Consumer spending barely increased quarter-over-quarter and businesses invested less on inventories despite other positive signs for the future.
 
Though the economy frequently gets off to a slow start, Trump’s allies are hoping that this is just a temporary dip in productivity. If Trump continues to target infrastructure spending, tax cuts, and deregulation, then he could give a real boost to the U.S. economy that could be viewed more clearly in the Q2 numbers.

Despite souring economic news and this latest blast to the president’s optimistic rhetoric, American consumers remain extremely confident following the election of Mr. Trump, according to the University of Michigan. However, this sense of optimism has not resulted in positive spending gains yet, as revealed by the recent Q1 numbers.
 
Many economists have brushed off the Q1 slowdown as merely a blip due to temporary factors. As a result, most economists expect growth to rebound to somewhere between 3% and 4% this quarter.
 
The remainder of 2017 should be quite different from Q1’s slow start.
 
Sluggish consumer spending is somewhat confusing due to consumer confidence appearing to remain at elevated levels. Household outlays grew by the smallest amount since the end of 2009, as Americans reduced big-time purchases like cars and spent less on the home during a wet, yet warm winter.
 
Confidence is probably high for consumers because Trump is promising to put more money in the pockets of businesses and individuals across the nation. Trump cannot simply strike a hard bargain on the U.S. economy like he did with his real estate deals of the past. He needs to enact lasting legislation with bipartisan support. Sadly, a thing of the past these days.
 
The House passed a one week stopgap spending bill today to keep the government funded through at least next Friday as lawmakers continue their work to finish legislation to fund the government through the rest of the fiscal year. The Senate later passed the continuing resolution, setting up a showdown for next week as to not upset Trump’s 100 day mark that officially comes tomorrow.
 
Politics will be played out over the next week as Democrats attempt to get Trump to concede on more than just the border wall with Mexico. The Democrats will likely hold the government hostage in order to stop the Republicans from passing some version of an Obamacare repeal.
 
We’ll see what happens in the coming days. It’s time from Trump to show his artistry in this, the most ultimate of deals. The country’s economy depends on it.