Monday Moneybeat: The government’s report card

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

NICK EICHER, HOST: The government last week released the final report card on the U.S. economy for 2018: the Commerce Department report on gross domestic product—GDP.

So here it is: Overall, GDP grew 3.1 percent between the end of 2017 and the end of 2018.

GDP is the broadest measure we have of economic performance, the total estimated output of goods and services together we all produce as a country: in current dollars, $20 trillion, 891 billion. That’s more than a trillion dollars better year over year.

There’s good news and bad news in the report. I’ll start with the bad: Since the end of June last year, the GDP growth rate has slowed substantially. We measure GDP by quarter, so once every three months. At the end of the 2nd quarter 2018, we were growing at a rate of 4.2 percent. Third quarter slowed by eight-tenths of a percentage point, and in the 4th quarter, the economy slowed by another eight-tenths of a percentage point. It ended the year at a growth rate of 2.6. So the hottest part of the 2018 economy was about eight months ago.

But I said there was good news here, and it’s this: Since the great recession of 2007, GDP growth has averaged a piddling 1.7 percent. Prior to that time, from 1991 up to that recession, economic growth had averaged around 3 percent. So, now we are back on that pre-recession track.

REICHARD: And in the view of the White House, we’re there to stay, based on current economic policy. Kevin Hassett is chairman of the White House Council of Economic Advisers. He says the first quarter of this year is going to be slow, but he’s confident we’ll have another 3 percent year in 2019.

Hassett’s been right about the first two years of the administration. Here he is, speaking to the U.S. Chamber of Commerce last week.

HASSETT: If we go back a year ago, when we said that 2018 would be 3.1, we had, you know, everybody was saying, ‘Oh, that’s ridiculous, you know, that we’re in this new normal, you know. We’re gonna be lucky if we get above 2,’ and so on. And yet, you know, came in about like what we said.

EICHER: Another Commerce Department report said consumer spending fell in December, surprisingly. Holiday spending typically powers year-end GDP, but not this year. It was down in December half a percent versus November.

But the good news is inflation remains under control: it came in at 1.7 percent in December versus a year ago.

REICHARD: On Wall Street, stocks ended mixed: two of the major indexes up, and two of them down, slightly.

The Standard & Poor’s 500 rose four-tenths of a percent. That’s the S&P 500’s fifth consecutive winning week. The tech-heavy Nasdaq picked up nine-tenths.

EICHER: The Dow Jones Industrials, you could say finished virtually flat. It was down two-one-hundredths of a percent. And the Russell 2000 index of smaller company stocks finished off three-one-hundredths of a percent.

All those indexes, all four, are showing double-digit gains so far this year.

And that is today’s Monday Moneybeat.

(AP Photo/Carolyn Kaster) Kevin Hassett, chairman of the White House Council of Economic Advisers, talks media outside of the White House in Washington, Friday, March 1, 2019.

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