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U.S. Economic Growth Continues Slow: It Should Come In At About 2% In 2017.

ArmchairPolitiicianEconomy, July 28, 2017, by Brad Peery, www.ArmchairPolitician.US, ArmchairPolitician.US@gmail.com

GDP growth came in at 2.6% for Q2 2017, compared to the 3-4% growth rate we expected. However the first quarter was revised upward from 0.7% to 1.2%. This puts the first half growth rate at about 1.9%.

Nonfarm payrolls jumped 222,000 in June, against expectations of 179,000. Job growth with revisions to earlier estimates brought the monthly average gain since April to 194,000. Employment gains have averaged 180,000 per month in 2017, a shade below the 187,000 in 2016. However the 194,000 average over the last 3 months was ahead of last years 187,000 per month.

The unemployment rate increased to 4.4% in June, up from 4.3% in May. The job growth was offset by additional workers, who were on the sidelines, coming back and looking for work, raising the unemployment rate slightly. Wage growth was muted, with average hourly earnings up 2.5 percent on an annualized basis in June. Despite the low unemployment rate, hourly wages have not seen the typical increases that occur when the unemployment rate is low and the economy is growing. Also, there appear to be many jobs available, but employers are unable to find workers with the skills to perform the jobs. Trump has talked about the need for students to take skilled job training at community colleges, etc., instead of pursuing college degrees.

The overall Sentiment Index has declined by 5.1 Index-points since the January peak, which was the highest figure in a dozen years. The relatively small decline still left the Sentiment Index higher in the first seven months of 2017 than in any other year since 2004. The consumer outlook remains strong.

ArmchairPolitician.US Opinion:
The economy is likely to come in at about 2.0% for 2017. This is well below the 3% growth rate Trump is pursuing. The strong stock market has put money in consumers hands, and consumer debt is modest. The outlook for the economy remains strong.

President Trump lost the battle to replace Obamacare. He still has plans for tax reductions, and infrastructure spending that may boost the economy.

The fact that none of the Democrats are supporting Trump’s agenda so far has made it difficult for the Republicans. The have very conservative Senators such as Rand Paul, moderates, such as Lisa Murkowski, and Mavericks such as John McCain. It was the moderates, and John McCain plus the obstructionist Democrats that killed the Obamacare replacement bill.

The hope was that perhaps about $800 billion of Obamacare spending savings over 10 years from the Obamacare replacement bill would help pay for the tax reductions. That will now not be the case, reducing the size of the tax reductions that are likely and putting a dent in Trump’s plans to achieve a 3% GDP growth rate.

See:

ArmchairPolitiicianEconomy, April 30, 2017, by Brad Peery, brad@ArmchairPolitician.US, www.ArmchairPolitician.US
U.S. Economic Growth Slows: It Should Accelerate Next Quarter and Come In At About 2% In 2017.

See also:

March 2, 2017, Brad Peery, ArmchairPolitician.US
Trump Believes We Can We Achieve 3% Economic Growth. What are the Realities?

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