Monday Moneybeat: The economic report card

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: If in all of politics, you can reduce economic performance to a single number—let’s say, the equivalent of a student’s grade point average—that would have to be growth in gross domestic product. 

So in academics, it’s GPA. In economics, it’s GDP. 

And on Friday, the government released a report card on the economy for the second quarter, and the number is 2.1 percent.

GDP is the broadest measure we have of economic output. It includes measures like business investment and consumer spending. Unlike a student’s GPA, an economy’s GDP can be either positive or negative. When the number is negative and remains so for two consecutive quarters, that’s a recession by definition. When it’s positive, that’s a recovery or expansion. 

The United States economy is currently in its longest expansion in its history, coming out of the 2008 recession. But it’s also the weakest expansion on record, even if lately economic growth has accelerated.

About that: the 2.1 percent 2nd quarter GDP represents a slowdown from the 1st quarter. Economists expect a shot in the arm from the Federal Reserve bank tomorrow and Wednesday. The Fed is likely to announce a cut in interest rates and may signal more to come if economic growth doesn’t perk up.

REICHARD: One other note about GDP figures. They are estimates, and as such they’re subject to revision. Along with the first estimate of 2nd quarter GDP, the Commerce Department also revised the last five years of GDP figures.

Turns out, 2018 wasn’t as robust as first reported. Politically speaking, the revision took away a coveted political talking point from President Trump. The 2018 full-year number had been 3 percent. Now it’s 2.5. But the 2017 full-year figure was better.

So if you average the two years, and White House economic adviser Larry Kudlow does, it’s about 2.7 percent a year. That, he told reporters last week, is evidence that his boss’s economic performance is much better than his predecessor’s.

KUDLOW: The prior administration, their performance was 1.9 percent annually. So we’re running 40, 42 percent above that trendline. I mean, and I think, by the way, the pickup in the trend is actually, in fact, because of lower taxes and rollback of regulations and the opening of the energy sector and the trade reforms.

EICHER: On Wall Street, more new record highs for both the Standard and Poor’s 500 and the Nasdaq stock indexes, and—by now—you may be all numbered-out, so I’ll just say all the major indexes posted winning weeks. 

And that is today’s Monday Moneybeat.

(AP Photo/Alex Brandon) White House chief economic adviser Larry Kudlow speaks with reporters at the White House, Friday, July 26, 2019, in Washington. 

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.