By Jon Dougherty
Democrats running for their party’s 2020 presidential nomination are going to have an increasingly difficult time convincing Americans that their vision of a top-heavy, government-run, socialist economy is superior to the free-market, capitalist juggernaut that their rival, POTUS Donald Trump, has built.
Economic figures for the fourth quarter are in and they show “unexpectedly” strong growth. In fact, fourth-quarter numbers show that the Trump economy posted the strongest growth since 2005.
Zero Hedge reports:
Following a one month delay due to the government shutdown in January, moments ago the BEA reported GDP for the fourth quarter combining both its first and second estimates, and while consensus was expecting a sharp slowdown in the last quarter of the year, from 3.4% in Q3 to 2.2%, the US economy surprised to the upside in Q4, when it grew a stronger than expected 2.6% (2.590% to be precise).
As the BEA explained, “this initial report for the fourth quarter and annual GDP for 2018 replaces the release of the ‘advance’ estimate originally scheduled for January 30th and the ‘second’ estimate originally scheduled for February 28th.”
On a year over year basis, 2018 GDP rose 3.1%, the highest print since 2005, and another chance for Trump to claim an economic win, although as Joseph Lavorgna notes, “at present, we’re still looking for sub-2% growth in the current quarter” and adds that these data also have no bearing on #Fed policy which is comfortably on perma-hold.
Wall Street responded positively to the news, especially the overall growth rate for last year and the unexpected rise in GDP for the 4th quarter, per Fox Business:
Equity futures pared declines as the U.S. economy grew by a rate of 2.6 percent this winter, beating analysts’ estimates of 2.3 percent thanks to solid consumer and business spending.
Futures had originally sold off after the summit between President Trump and North Korea’s leader Kim Jung-Un was cut short without the two making a deal. North Korea had demanded that U.S.-led sanctions be lifted.
In 2018, the GDP increased by an estimated 2.9 percent (compared to 2.2 percent in 2017), narrowly missing the Trump administration’s goal of 3 percent growth for the year.
As for what to expect as 2019 rolls on, long-time bull Edward Yardeni sees positive signs and reason for more optimism.
In a research note this week, he singled out bear market forecasters who are warning investors that the earnings slowdown will derail the 2019 rally.
“There’s some bearishness because the comparisons for earnings on a year-over-year basis are probably go to be flat — maybe even slightly negative in the first half [of the year],” the Yardeni Research chief investment strategist said Wednesday on CNBC‘s “Trading Nation.”
“But beyond that, I think we are going to see an economy that’s growing with growing earnings.”
- Follow Jon Dougherty on Twitter at @JonDougherty10
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