Ian Shepherdson, chief economist at Pantheon Macroeconomics, said that the fourth quarter was “not a bad performance” given that the economic boost from the Trump administration’s tax cuts is now fading.
For the full year, GDP grew by 2.9% – just shy of President Donald Trump’s 3% target – compared with 2.2% in 2017.
Mr Shepherdson said he expected that growth in 2019 would revert to the “post-crash trend” of between 2% and 2.5%, “demonstrating that the personal tax cuts offered nothing more than a sugar high, and that the business tax cuts did nothing to lift trend growth. Though they did make shareholders richer”.
It is actually more than most independent economists think the US can sustain over the long term. Many think there was a short-term boost from President Trump’s tax cuts which is now fading.
Mr Ashworth said that both factors mean that “consumption growth could fall below 2%” in the first quarter of 2019.
Also, while business investment growth reached 6.2%, he said “the first quarter won’t be this good”.