This week, the Department of Commerce released its preliminary estimate of how the U.S. economy performed in the 2nd quarter of 2017. Here’s what you need to know:
- The U.S. economy expanded 2.6 percent from April to June.
- While 2.6 percent economic growth is on its face so-so (the Trump administration is targeting 3 percent economic growth for budgetary purposes — the post-World War 2 average growth rate), Forbes.com’s Tim Worstall has covered how the “seasonal adjustments” in the Department of Commerce’s methodology have a habit of juicing the stats for the second quarter.
- In addition to releasing the second-quarter GDP estimate, the Department of Commerce also downgraded first-quarter economic growth to a pitiful 1.2 percent.
- Taken together, current estimates show the economy expanded at 1.9 percent in the first half of 2017. As PNC Financial Services Group economist Stuart Hoffman stated, the economy is “still traveling in the 2% ‘slow lane’” as it has been for the past 7 years.
- 1.9 percent economic growth in the first half of 2017 is on par with The International Monetary Fund’s forecast, which estimates the U.S. economy will grow 2.1 percent this year.
So where does this leave us? In need of a shot of economic adrenaline.
As I noted in my first National Pulse column, President Trump inherited an economy that was crawling. Six months into his administration, it’s no surprise that economic growth remains scarce — this is still Obama’s economy.
Remembering this is key as we head into what is sure to be a contentious debate on Capitol Hill over tax cuts. Despite record-high closings in the stock market since Trump’s inauguration, wage gains and GDP growth still remain elusive.
With this in mind, one would hope that Congress will convene with a unified sense of purpose, and even urgency, when tackling America’s inefficient and outdated tax code. America’s economy has been stuck in second gear for the past two presidential administrations, but the buck can stop with President Trump.
Trump has made it clear that enacting pro-growth tax reform is central to his plan to Make American Great Again. One prominent proposal to restore American competitiveness via tax cuts comes from Larry Kudlow, Stephen Moore, Arthur Laffer, and Steve Forbes who have proposed 3 easy pieces for tax reform including:
- A 15 percent business tax rate for small and large businesses, with full and immediate expensing for capital purchases.
- A repatriation tax at 10 percent for foreign earnings brought back to the United States.
- A doubling of the standard deduction from $6,500 to $13,000 for individuals and $13,000 to $25,000 for couples, to put more money into their pockets now and to simplify tax returns.
With economic growth remaining at an anemic 2 percent, Congress must take bold action to right our economic ship and unleash prosperity.
Photo credit: Ken Teegardin via Flickr, CC BY-SA 2.0