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Trump Just Did Something Obama Never Could — Deliver On Promised GDP Growth

The Bureau of Economic Analysis' announcement that GDP growth for Q4 2017 was just 2.6%, and annual growth rate last year was 2.3%, came as something of a disappointment since economists had been expecting a higher number.

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The Washington Post harrumphed that GDP growth for 2017 was "better than the year before, but far short of what Trump is promising. Officials had focused on 3% GDP growth as proof his economic policies were working, and Trump has said it could go far beyond that target."

Sorry, but the Post — and anyone else making such claims — is wrong.

When Trump released his budget in 2017, it included — as every president's budget does — a forecast for GDP growth for the current year.

What did Trump's economists say GDP growth for 2017 would be? Well, they said it would be 2.3% — exactly what the economy delivered, according to the BEA.

Is this unusual? Perhaps White House economists routinely get GDP growth for the year more or less right. After all, they're highly trained, and they're only trying to making a prediction about the next 12 months.

But it turns out that there was not a single year under President Obama when his economic forecast held up. (See the nearby chart.)

In every case, real GDP came in below — and sometimes well below — what Obama's economists expected. As with Trump's budget, those forecasts tried to gauge the impact of Obama's economic and budgetary proposals for the year.

What does it say about Obama's economists that they were always too optimistic about the impact of his tax-spend-and-regulate policies, while Trump's economists got growth right, and might have even lowballed it?

Keep in mind that the latest Q4 number is just the "advance" estimate that, if anything, is likely to get revised upward as the Commerce Department collects more data.


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Since 2015, the government's advance estimate has been too low in all but three quarters. The advance estimate for Q2 of last year, for example, was 2.6%; the final number was 3.1%.

One could argue that Obama didn't get all his policies enacted and that affected economic growth. But neither did Trump. No president ever does.

However, Trump's pro-growth agenda did spark an incredible jump in economic and business optimism, and he did take aggressive steps to deregulate the economy. The idea that this sharp change in direction had no impact on the business climate is foolish.

In any case, last year's result should make Trump's forecast for the future more credible. Not that they are wildly optimistic. In his budget last year, Trump pegged GDP growth in 2018 at just 2.7%, followed by 2.9% in 2019, and then 3% in 2020.

Trump will no doubt update those forecasts when his new budget comes out in the next month or so. But before anyone dismisses Trump's economic outlook as unrealistic, remember who has the better track record so far when it comes to making such predictions.

  • Merline is Deputy Editor of Commentary and Opinion at IBD.

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