The Trump administration is telling Republican lawmakers to expect blockbuster economic figures Friday morning when the Commerce Department releases data on U.S. gross domestic product (GDP) for the second quarter.
Kevin Hassett, the chairman of the Council of Economic Advisers, told Republican senators in a private meeting Wednesday that GDP for April through June is expected to be high enough to ensure the nation will see its first year of annualized 3 percent growth since the Great Recession of 2008-2009, according to several sources in the room.
“He’s not ruling out a very big number,” said one grinning GOP senator who attended the meeting.
That’s stellar news for Republican lawmakers who are making economic growth under President TrumpDonald TrumpCapitol fencing starts coming down after 'Justice for J6' rally Netanyahu suggests Biden fell asleep in meeting with Israeli PM Aides try to keep Biden away from unscripted events or long interviews, book claims MORE and the stimulus provided by the 2017 tax cut their main arguments for preserving GOP control of the House and Senate.
The consensus estimate is for second-quarter GDP to come in at 4.2 percent, with some estimates as high as 4.8 percent. The U.S. economy expanded at a 2 percent rate in the first three months of the year, according to the most recent Commerce Department data.
Hassett told GOP lawmakers that Friday’s figure is likely to be strong enough to put this year’s GDP on track to exceed 3 percent, something that never happened under former President Obama and a major Republican criticism of his administration during the 2016 campaign.
“The Atlanta Fed estimated it can be as high as 4.8,” said Sen. David Perdue (R-Ga.). “It’s going to be very strong.”
“It’s a manifestation of what we did starting last year with the regulatory work — the pullback of regulations — the energy work that we did, the tax work and the Dodd-Frank,” he added referring, to the repeal of 14 Obama-era regulations, tax reform and the loosening of regulations tied to the 2010 Dodd-Frank Wall Street Reform Act.
Republicans predict these types of economic gains will help them in the November midterm elections.
“We will test James Carville’s maxim: It’s the economy, stupid,” said Sen. Ron JohnsonRonald (Ron) Harold JohnsonDomestic extremists return to the Capitol GOP senator: Buying Treasury bonds 'foolish' amid standoff over debt ceiling, taxes Internal poll shows Barnes with 29-point lead in Wisconsin Democratic Senate primary MORE (R-Wis.).
President Trump this week touted the strong economic figures under his administration.
“Our Country is doing GREAT. Best financial numbers on the Planet. Great to have USA WINNING AGAIN!” he tweeted.
Robust economic data have helped Trump weather numerous controversies that might otherwise sink his poll numbers.
Trump’s recent approval numbers have barely budged, even after delivering what many Republicans called a disastrous performance during a joint press conference with Russian President Vladimir Putin in Helsinki last week.
While Obama achieved 3 percent growth rates in individual quarters here and there, his annual figures never exceeded 3 percent, according to PolitiFact.
That became a Republican mantra in the last election.
Trump predicted during the 2016 campaign that he would be able to bring the nation’s GDP to 4 percent a year or higher.
His promises to turbocharge the economy were greeted with skepticism from Democrats and many economists.
Obama was particularly skeptical about Trump’s plan to bring manufacturing jobs back to the United States, asking at one point during the campaign, “What magic wand do you have? And usually the answer is, he doesn’t have an answer.”
Trump fell short of his promise last year, when the economy expanded 2.3 percent — something of an embarrassing figure after the big claims on the campaign trail.
Economic experts last year questioned if the country was even capable of returning to more than 3 percent growth for a full year because of what they saw as ingrained problems in the domestic economy.
Jason FurmanJason FurmanThe Fed needs to articulate its framework for inflation Biden signals tough stance on tech with antitrust picks GOP seeks to make Biden synonymous with inflation MORE, who served as Obama’s top economic adviser, argued in an article for Vox.com in May 2017 that 3 percent annual growth was “extremely unlikely.”
Experts pointed to the slow growth of the labor force and stagnant productivity as economic roadblocks.
Liberal economist Dean Baker told PolitiFact last year that without a significant increase in productivity, “a 3-percent growth forecast is nonsense.”
Of course, two major game-changers happened after those predictions were made: Congress passed a massive $1.5 billion tax-reform package, as well as a budget deal that increased federal spending by $300 billion over two years.
Hassett showed Republican senators a chart Wednesday indicating U.S. companies will repatriate $1.22 trillion in foreign earnings this year.
So far this year, cumulative tax revenue by month has surpassed last year’s revenue every single month — January through June — according to numbers reported by the Bureau of the Fiscal Service, a division of the Treasury Department.
Democrats, however, argue that Trump is also reaping the benefits of the fiscal policies Obama put in place.
Senate Democratic Leader Charles Schumer (N.Y.) argued in February that last year’s explosive rise in the stock markets was due more to Obama than Trump.
“Here are two words we will not hear President Trump say tonight about the economy — ‘Thanks, Obama!’ — because much of the growth in 2017 was created by President Obama’s policies and, by many measures, the growth under President Obama was better than under President Trump,” Schumer said on the Senate floor before this year’s State of the Union speech by Trump.
More recently, Schumer and other Democrats argued that the benefits of the growing economy aren’t filtering down to the middle- and working-classes. They also said that whatever paycheck increases they’re seeing as a result of the 2017 tax cuts are being wiped out by rising gas prices and health-care costs.
Hassett also showed off a chart depicting across-the-board increases in private investment and planned capital expenditures in 2018 compared to last year.
Investment in structures and intellectual property are up 16 percent and 13 percent, respectively, compared with 5 percent and 4 percent in 2017, according to the document.
Total business fixed investment has increased 10 percent after climbing 6 percent in 2017, according to the data presented to lawmakers.
Another chart presented by Hassett showed that real disposable income has increased by 3 percent this year following last year’s gain of 2.3 percent.