Economic Growth Expected To Be Up In Latest Report
RACHEL MARTIN, HOST:
Here's a big question for President Trump - can he keep a promise to spur economic growth, far faster economic growth than the U.S. has seen in years? His administration began with slow growth. Today we got another number for the second quarter and it was much better - a 2.6 percent annual growth rate during April, May and June. Joining us now to talk about this is NPR economics correspondent John Ydstie. Hey, John.
JOHN YDSTIE, BYLINE: Hi, Rachel.
MARTIN: So the administration has promised to move the economy to a 3 percent growth rate, which would be pretty aggressive growth. Is this a step in that direction?
YDSTIE: You know, I don't think we can say that because the number we got, 2.6 percent, was slightly below expectations. And growth for the first quarter was revised downward to 1.2 percent. If you average the two, you're right at a 2 percent growth rate that you - we had during the Obama years. So far I think you'd have to say the economy is still on that long-term trend, one that's been disappointing for a lot of people who feel stuck.
MARTIN: But the second quarter growth doubled the growth rate in the first quarter. Isn't that a good sign?
YDSTIE: Well, what happened in the second quarter is people came out to shop, construction picked up after the ice and snow left, which is normally what happens. That's certainly been the pattern since the Great Recession, a very slow start to the year and then a bounce back in the spring. A couple of signs that there may be some momentum building are that consumer spending picked up nicely and business investment, which has been very weak, picked up as well.
MARTIN: What about the president's promises to get tax reform done, to cut taxes and to boost infrastructure spending? Could that get us to 3 percent?
YDSTIE: You know, a lot of economists don't think so. And if you look at the trouble the Republicans are having legislating, it's hard to bet on a tax cut the size of the one the president campaigned on. And there's not even much talk about an infrastructure program these days. If Trump got those, a lot of economists think it might add a few tenths of a percent to growth for a time, but not move the needle up to 3 percent for a long period, and certainly not the 4 percent that the president promised during the campaign. I think that the consensus is the economy remains on this 2-percent growth path that's - we've averaged since the Great Recession ended.
MARTIN: For millions of Americans, that's just - that's too slow, right? I mean, people's wages haven't been growing. They've been stagnant for so long.
YDSTIE: Yeah. For lots of Americans, the economy hasn't provided what they need to get by, much less to get ahead. But lots of economists say that's - for a variety of reasons that's really the economy's potential. For instance, we're not seeing game-changing innovation like jet travel or microchip development these days that would make us more productive and richer. And there's still a hangover from the Great Recession, consumers and businesses still being very cautious. Although there are some signs in this report that that might be changing a bit.
MARTIN: We'll keep following it. Economics correspondent John Ydstie for us this morning. Thanks so much, John.
YDSTIE: You're welcome, Rachel. Transcript provided by NPR, Copyright NPR.