Release of the fourth-quarter Gross Domestic Product by the Bureau of Economic Analysis (BEA) was delayed almost a month, as a result of the 35-day partial government shutdown, the longest in U.S. history.
But when the data was released, it was good news. America’s economy grew by a rate of 2.6%, beating analysts’ estimates, thanks to solid consumer and business spending.
Some analysts, however, said there could be a slow-down in 2019.
Thursday’s report did give President Trump some bragging rights — albeit with an asterisk.
Economic output rose 3.1% in the fourth quarter from a year earlier. That’s a politically salient benchmark because the president and his advisers have repeatedly promised growth of 3% or better, something his predecessor never achieved over a full calendar year. Trump has, at other times, promised growth of 4% or more.
But the reality is that growth slowed in the last few days of 2018 and most economists envision a weaker outlook for the coming months and probably years.
For the current January-March quarter, many analysts say they think growth could slow to a 2.2% annual rate or less.
“I think the economy will be steadily throttling back over the next two years,” Moody’s Analytics Chief Economist Mark Zandi said.
The economy’s pace of expansion last quarter reflect a slow-down in consumer spending and the start of the 35-day partial shutdown of the government, which subtracted an estimated 0.1% point from growth.
That weakness was offset somewhat by a gain in business investment and less of a drag from trade.
The $1.5 trillion tax cut that Trump pushed through Congress in late 2017 and billions of extra dollars in government spending that Congress added for military and domestic programs helped accelerate the economy in 2018.
AP Economics Writer Martin Crutsinger wrote that in the view of most economists, 2018 may turn out to have been the economy’s high point for some time.
Many are forecasting that growth in 2019 will slow to around 2.2% and to weaken further in 2020.
Some negative economists say they think the economy could even dip into recession next year, as the support from the tax cuts fades and the global economy sputters.
Chairman of the White House Council of Economic Advisors Kevin Hassett argued, in an interview, that private forecasters are relying on outdated models that don’t fully reflect the latest research.
The Trump administration officials projected that their policies will produce growth surpassing 3% in coming years.
Time will tell who’s right.