Issue of the week: Looking for a ‘Trump bump’
Campaign promises aside, “the U.S. economy was not great again in the first quarter of Donald Trump’s presidency,” said Ben White in Politico.com. Economic growth slowed to an anemic 0.7 percent in the first three months of 2017, the Commerce Department said last week, down from 2.1 percent during the final quarter of last year. The disappointing figures, “the economy’s worst performance since the first quarter of 2014,” pose a political dilemma for President Trump. Republicans have already blamed the weak data on the Obama administration, and argue the report demonstrates the need for Trump’s agenda of tax cuts and deregulation. But they also understand that the optics for the White House aren’t good. Since taking office, Trump has been quick to take credit for any positive economic news, like a strong jobs report in February. “By touting every good number, Trump now owns the dismal first-quarter GDP figure.”
That’s ridiculous, said Investor’s Business Daily in an editorial. Trump “hasn’t been in office long enough to take credit or blame for the GDP number.” What we’re seeing is the continuation of the weak growth that prevailed under President Obama, who presided over the “slowest economic expansion for any president since the Great Depression.” What’s more, there’s no real reason for concern, said Jeffry Bartash in MarketWatch.com. “Over the past several years, the U.S. has usually started out slowly in the first quarter, only to see a frantic burst of growth in the spring.” With a strong jobs market, high consumer confidence, and corporate America “thrilled by the pro-business policies of the Trump White House,” many economists expect to see growth speed up to 3 percent or more in the second quarter.
“First-quarter slowdowns have become such a regular feature of the U.S. economy” that it’s tempting to ignore this one, said Justin Lahart in The Wall Street Journal. We shouldn’t. There’s a big red flag buried in the data: Consumer spending, which accounts for about two-thirds of the economy, is slowing down. Americans cut back sharply on big-ticket purchases like cars and appliances, causing overall spending to grow at just 0.3 percent, the worst showing since 2009. This slowdown is troubling because consumer spending wasn’t the culprit behind other weak first quarters, which were generally thrown off by seasonal quirks like unusual weather.
“Perhaps now pundits will cease to believe that Trump has awoken some ‘animal spirits’ in the economy,” said Jennifer Rubin in The Washington Post. The president’s cheerleaders point to a recent surge in consumer confidence and the soaring stock market as evidence that the economy is on the edge of a boom. But these GDP numbers just provided a sobering “wake-up call.” Rarely have “soft” and “hard” economic data been so out of whack, said Paul Krugman in The New York Times. Consumers report feeling “super-confident” in the economy, but so far “they’re not acting on those feelings.” Likewise, the stock market keeps ticking skyward, with no real evidence that business fundamentals are improving. The disconnect can’t continue forever. If Trump’s economy doesn’t start delivering, “this levee is going to break.” ■