The Bureau of Economic Analysis released data this morning showing that the economy grew at a 4.1 percent annualized rate in the second quarter of 2018, after growing at just a 2.2 percent rate in the first quarter. There is little in these six months of data to indicate that American economic growth has moved off the same trend that has characterized most of the post-Great Recession recovery. Since the recovery began in mid-2009, faster quarterly growth rates than 4.1 percent have been recorded four times. Faster two-quarter growth has been seen seven times since the recovery began. Nonresidential fixed investment—the component of GDP that proponents of last year’s tax cuts claimed would be most-buoyed—rose at a 7.3 percent rate in the second quarter, slower than the 11.5 percent rate that characterized the first quarter. Again, these rates of growth are higher than average for the post-2009 recovery, but hardly remarkable. In short, there remains no evidence at all of the tax cut boosting economic growth.
A notable feature of today’s data release is that yearly inflation for core prices for personal consumption expenditures (excluding food and energy) remains below 2 percent, as it has for every single quarter except one since the economic recovery from the Great Recession began in 2009. Today’s GDP release also contained benchmark revisions that in some cases revised data back to 1929. In a later blog post we will highlight any notable changes resulting from these revisions.