It wasn’t long ago that economists were warning that President Trump’s government shutdown — which extended into late January — would wreak havoc on an already struggling economy, especially in the first quarter of the year.
So what are these experts saying now that GDP growth accelerated to a startling 3.2% in the first three months of the year?
Early in the year, anyone following the news was being bombarded with warnings about the economic calamity that the lengthy (partial) government shutdown would cause.
“The government shutdown may have done significantly more damage than was projected at the time,” is how one writer at Seeking Alpha put it.
Politico was clanging the alarm bells even more vigorously. “Across Wall Street, analysts are rushing out warnings that missed federal paychecks, dormant government contractors and shelved corporate stock offerings could push first-quarter growth close to or even below zero if the shutdown, which is wrapping up its fourth week, drags on much longer.”
A Reuters poll of economists found that “U.S. economic growth will take a hit this quarter from the longest-ever government shutdown.”
At the start of the year, Macroeconomic Advisors pegged growth for Q1 at a mere 1.5 percent.
And AP reported in the first week of January that: “Analysts had already expected the economy to slow this year as a boost from tax cuts and increased government spending last year begins to wane. But the longer the shutdown persists, the more it could erode consumer and business confidence, compounding troubles for an economy that was already slowing.”
Instead, the economy recorded its highest quarterly growth rate since 2013. Still, the Commerce Department will revised this GDP number twice as more data come in, so it could change — it could go up or down.
But as it stands, over the past four quarters, the economy has grown by more than 2.9%, compared with the previous four quarters.
This is hardly the first time the economy has unexpectedly done better than economists had predicted. Since Trump took office, growth has repeatedly done better than the experts forecast, as his deregulatory efforts and pro-growth tax cuts have turbocharged an economy left moribund by Obamanomics.
So what are these economists saying now? According to the New York Times, this surprisingly high level of growth is exaggerated.
“Economists warned that the report was inflated by short-term factors and probably overstated the underlying pace of growth,” Ben Casselman reported. “Most anticipate a downshift as the year progresses, and hardly any independent economists expect that President Trump will be able to deliver the 3 percent growth he has promised this year.”
Got it? The same folks who were telling us to expect close to zero growth this quarter — and who consistently overpromised growth during the Obama years — are now saying, trust us, the economy will slow soon.
It would be cynical to attribute such erroneous forecasts to political partisanship. But what’s the other choice? That professional economists are as reliable as the local weather forecaster?
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