For the third straight year, the strong and growing Trump economy has beaten the federal government’s own pre-election forecasts.
After just 36 months of President Trump’s leadership, with economic growth exceeding expectations, America’s real GDP is now more than a quarter of a trillion dollars higher than the experts anticipated. That’s more than $7 billion of extra economic activity every single month. No wonder unemployment is at a 50 year low and wages are rising.
Real GDP growth in the fourth quarter of 2019 was 2.1 percent, exceeding economists’ expectations of 1.9 percent quarterly growth and bringing our growth rate for the full year to 2.3 percent.
In 2016, the Federal Reserve’s Open Market Committee (FOMC) predicted that the economy would only expand by about 1.7 percent last year. The Congressional Budget Office (CBO) was even more pessimistic, forecasting growth of just 1.5 percent.
This is a phenomenal result — even better than it seems because an unforeseen global economic slowdown created a significant drag that government economists were not accounting for in 2016.
President Trump’s pro-growth agenda of tax cuts, deregulation, and genuinely fair trade agreements is clearly working. Despite facing unanticipated headwinds, the U.S. economy continues to significantly outperform the forecasts that government economists put forward before Trump took office.
Other unanticipated issues negatively impacting GDP growth in 2019 included the problems at Boeing, a strike at General Motors, and the lingering impact of the Fed’s tighter monetary policy. Nonetheless, GDP growth again exceeded expectations.
Since the 2016 presidential election, the U.S. economy has grown at a 2.6 percent annualized rate, better than any other G7 country. Among the world’s largest advanced economies, Canada was the only country, aside from the U.S., to achieve growth above 2.0 percent over the same time span, during which the average growth rate of G7 countries was a paltry 1.5 percent.
China, the world’s second-largest economy, has also been buffeted by economic shocks in recent months, partly due to the strategic counter-tariffs President Trump imposed in response to decades of abusive trade practices by the communist country.
Beijing's self-inflicted misfortune (they could have avoided the counter-tariffs if they had simply agreed to start playing by the rules) turned out to be an opportunity for America, though. Primarily thanks to a sharp decrease in imports from China, the trade deficit shrunk significantly in the Fourth Quarter, contributing substantially to America’s overall growth.
The president’s critics argue that trade policy uncertainty negatively impacted GDP growth in 2019. The Federal Reserve released a study in September suggesting that the impact could have been as much as 1 percent. That risk strikes me as overstated. But, in any event, the success of the Trump administration’s approach has meaningfully reduced those uncertainties going forward.
Trade is now likely to fuel higher growth in the U.S. for the foreseeable future, following several major breakthroughs with our largest trading partners.
The “Phase One” trade agreement that the Trump administration just reached with China will result in at least $200 billion in additional American exports over the next two years, and the newly-approved United States-Mexico-Canada Agreement (USMCA) is expected to add an additional $68.2 billion to U.S. GDP.
The economic outlook gets even rosier when one considers that we’re already in a position of historic strength. The unemployment rate remains at a half-century low. Incomes continue to rise steadily, with wages for the lowest-paid workers increasing fastest of all. Inflation remains low and stable despite the roaring economy, leaving the door open for the Federal Reserve to cut interest rates in the interest of generating even stronger growth.
President Trump’s pro-growth agenda of tax cuts, deregulation, and genuinely fair trade agreements is clearly working. Despite facing unanticipated headwinds, the U.S. economy continues to significantly outperform the forecasts that government economists put forward before Trump took office. With the initial impact from our renegotiated trade relationships coming in 2020, our economic future looks very bright indeed.
Andy Puzder was chief executive officer of CKE Restaurants for more than 16 years, following a career as an attorney. He is currently a Senior Fellow at the Pepperdine University School of Public Policy.” He was nominated by President Trump to serve as U.S. labor secretary. In 2011, Puzder co-authored "Job Creation: How It Really Works and Why Government Doesn't Understand It." His latest book is "The Capitalist Comeback: The Trump Boom and the Left's Plot to Stop It" (Center Street, April 24, 2018).