bulls and bears

The Economics Quarterly: 2018Q1

by Wes Walker via libertyisftw.org


The preliminary estimate for the first quarter of 2018 was 2.3%, which extended the period of time the GDP growth rate has been 2.0% or higher to over a year. The final growth figure for the fourth quarter of 2017 was 2.9%. There has not been a negative GDP growth rate since the first quarter of 2014.

GDP Growth Rate (1/1/2002-05/4/2018)
United States GDP Growth Rate


The inflation rate rose to 2.4% in March, the seventh month with an inflation rate above 2%. The inflation rate has remained fairly stable since the end of the Fed’s quantitative easing policy in 2017.

Inflation Rate (1/1/2002-05/4/2018)
United States Inflation Rate


The average job numbers for the first quarter of 2018 were 211.67K, a strong number largely carried by the 324K job number in February. Without February, the average first quarter job numbers were still a solid, but less dramatic, 155.5K. The jobs number for April was a more robust 164K but is still preliminary.

Job Numbers (1/1/2002-05/4/2018)
United States Non Farm Payrolls


Per the most recent jobs report the labor force participation rate was 62.8%, 0.1 points above where it was when Trump first took office in 2017. The labor force participation rate peaked at 67.3% in January of 2000.

Labor Force Participation Rate (1/1/2002-05/4/2018)
United States Labor Force Participation Rate


The Federal Reserve Board voted to keep the federal funds rate at 1.50%-1.75%, bringing it in line with the federal funds rate in George W. Bush‘s first term (2001-2005). Without a significant increase in the inflation rate, it is unlikely that the federal funds rate will be increased significantly above its current level.

Federal Funds Rate Rate (1/1/2002-05/4/2018)
United States Fed Funds Rate


The total federal debt was $21,089,643,000,000.00 as of March 2018, with no significant decrease in the total public debt in the last 16 years.

Federal Debt (1/1/2002-05/4/2018)
United States Government Debt


The economy continues to roll ahead however isn’t without blemishes. Though the GDP growth rate remains stable at above 2.0%, the president promised growth rates far in excess of 2.0%. It is simply a fact that these numbers are not substantially better than the GDP growth rates under Obama. The modest preliminary GDP growth rate for the first quarter, especially given the tax reform passed at the end of 2017, is extremely puzzling, which begs further examination.

The jobs numbers for February were robust at over 300K, but they were followed by a much more modest 135K number, which strongly indicates what opportunities for hiring that were created by the tax reform passed by Republicans in 2017 were filled in February, and employers seemed much more reserved in March. The April job number of 164K represents fairly solid hiring, but the average job numbers for nonrecessionary April were 256K under Obama (from 2014 through 2016) and 260K under Bush (from 2004 through 2006), which makes the most recent April number a bit more modest.

The labor force participation rate remains alarmingly low, with no sign of increasing, despite whatever claims the president makes about the state of the economy. While the Republicans have nibbled around the edges by rolling back the Obama era health care tax laws and reforming the tax code significantly, overall employment rates remains historically low because of other economy killing factors that they have yet to address. Until they address those underlying factors, nothing Trump or the Republican Party does will reverse the loss of employment for millions of Americans.


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