search instagram arrow-down

GDP: Expectations Versus Reality

The good news is that we’re not in recession territory. The bad news is that economic growth is slowing down, dramatically. Q4 GDP is 2.6%, which is down from 4.2% in Q2 and 3.4% in Q3. Thanks to the Trump tax cuts and a jump in federal spending, 2018 was an exceptional year that will be hard to equal in 2019 and beyond. The tax cuts gave the economy a big boost, but it was short lived. It did, however, increased the deficit by $779 billion in 2018. And here is the thing about GDP: once you make a per-capita adjustment, the GDP number is actually lower. Q4 would be 1.80%. For some historical perspective see the chart below. The market had it right. There was reason to worry because economic expansion is heavily dependent on the Fed.

GDP

Leave a Reply
Your email address will not be published. Required fields are marked *

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: