Preliminary estimates released by the government on Friday showed that the nation’s output increased at an annual rate of 2.6 percent in the final quarter of 2017. Although that performance amounts to less than the heady 4 percent annual growth that President Trump has promised, it is further evidence — along with a sinking jobless rate and surging consumer confidence — of the economy’s resilience.
“The year-end is solid,” said Joel Prakken, chief United States economist at Macroeconomic Advisers by IHS Markit. Details within the report, about climbing business investment and depleted inventories, suggest more economic strength than the bare-bones headline number might indicate. “It portends well for 2018 demand,” he said.
In the year ahead, hefty tax cuts, particularly for businesses, are expected to encourage more investment and spending, although many economists predict ballooning deficits will overtake the positive effects in the longer term. One-time quirks that could affect growth measurements this year could also end up artificially pumping 2018’s figures.
Even analysts with ambitious forecasts for the next year, however, agree that the United States is unlikely to sustain annual growth of much more than 2 percent given a smaller, aging work force; sluggish productivity growth; and soaring deficits.
There’s a Big Red Flag in Today’s Report on the Economy
U.S. Economic Growth Slowed in 2017’s Fourth Quarter, Missing Trump’s Targets
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The slowdown was surprising — the past two quarters had exceeded 3 percent growth — in part because so many other metrics of the economy’s health had been bright recently, including the 4.1 percent unemployment rate and the stock market’s seemingly unstoppable rise.
And 2.6 percent growth is not considered a bad tally, but it does underline how difficult it will be for the administration to match its lofty promises.
