Celebrating a stronger economy is not a bad thing, of course. Over the long run, sustainable economic growth is what generates higher living standards and greater social mobility. But drawing sweeping conclusions from a single three-month period is problematic — even if politically tempting.
For one thing, it doesn’t necessarily tell you a whole lot about where the economy is heading. There were eight quarters of 3 percent growth or faster scattered across the Obama presidency, including four of 4 percent or faster and one of 5.2 percent. But there was never much follow-through, and overall the expansion muddled through at roughly a 2 percent annual pace. This GDP report will probably tell us even less than usual. RSM economist Joseph Brusuelas is looking for robust 5.1 percent growth, but thinks almost half of that, 2.3 percent, will be due to an artificial, one-time boost from farm exports as U.S. exporters of agricultural products such as soybeans rushed to beat China’s retaliatory tariffs.
Moreover, even a very strong report won’t tell us whether the Trump tax cuts, passed in December, are “working.” It’s just too soon.