Michael Hiltzik is a Pulitzer Prize winning economist who writes a weekly column for the L.A. Times. In May of last year he wrote a piece in which he said drumpf and his merry band of pillagers were "dreaming" if they thought they'd post over 3% growth for 2017.
This prediction raised the ire of Stephen Moore, an economic fellow at the Heritage foundation, who in an email exchange was ready to do his end zone shuffle to taunt Hiltzik when GDP Growth posted over 3% for the second and third quarters of 2017.
Unfortunately, two quarters do not a year make.
Obama posted some pretty good quarters too, back in 2014….
...quarters 2 and 3, in the above chart, huge gains, nearly 5% averaged, better that drumpf managed this year, which were balanced by a dismal 1st quarter and a so-so fourth.
GDP growth posted 2.6% for 2017.
The reasons why growth will not likely threaten 3%, as illustrated by the Chamber of Commerce projection at top are pretty straight forward, as Hiltzik explains in last yesterday's L.A. Times online edition:
“As Trump took office, the slack in the workforce already was minimal. It's true that the labor participation rate — the share of working-age persons with jobs — was at a mere 63%, down from 66.4% in January 2007. The aging of the U.S. population leaves little hope of reversing the trend line. The last big increase in workforce participation was the product of the baby boom, but those workers are now retiring. I cited a Pew Research Center report that unless immigration takes up the slack by providing 18 million more workers, the U.S. workforce will continue to shrink at least through 2035. Trump immigration policies will keep those workers out.
As for productivity, it's been declining for many years, and the trend doesn't seem to be reversing.”
As John Adams once noted, facts are stubborn things.
A shrinking workforce does not make for strong economic growth. Germany, Canada, France and Britain’s economies grew faster than the U.S.’s last year, and, with maybe the exception of Canada, all these counties have dealt with the backlashes of nativism and intolerance that have resulted from importing immigrant labor to sustain that growth.
As for the email war between Heritage and the L.A. Times, Heritage was brimming with confidence a few months ago…
"Any retraction coming from your article in the spring about Trump 'dreaming if he thinks he can get 3% growth'?
Over the course of a subsequent email exchange, he added: "Every left wing economist was wrong on growth for 2017." And, "Yes, it is hazardous to read too much into 6 months of data, but wow is this economy sizzling." And, "I'm just surprised that as a 'business' reporter for the LA times you missed the biggest financial story of the last eight years: the Trump moon bounce in the financial markets and the real economy - which is sizzling hot right now after a decade of malaise. But don't feel bad, most in the media and all the liberal economists who you cited missed the call as well."
But LA is confident in his game also:
“The truth is that presidents seldom have as much influence over economic cycles as they think, or wish. The U.S. stock market has been strong, but so have the markets in other developed countries. The same goes for GDP. Trump hasn't actually enacted much in the way of policy that would influence economic growth one way or another, though some recent initiatives, such as placing tariffs on foreign solar panels, might actually suppress U.S. growth. His economic team in Davos communicated a totally confused message on the U.S. dollar — Treasury Secretary Steve Mnuchin at first said the U.S. favored a weak dollar (which suppresses imports and spurs exports, but also could ignite domestic inflation), then walked back his remarks as Trump expressed support for a strong dollar.
The ultimate goal of 3%-plus economic growth? It would be a grand achievement if it happens. But it's not the way to bet.”