Economy Meets Its Full Growth Potential For The First Time In 17 Years
U.S. gross domestic product (GDP) is expanding to its full potential for the first time in a decade, The Washington Post reported Wednesday.
Former Presidents George W. Bush and Barack Obama saw the GDP lag behind what experts consider its full potential, but a Congressional Budget Office analysis estimates GDP growth at 3.3 percent for the third quarter of 2017.
That 3.3 percent figure actually slightly exceeds the “maximum sustainable level of output” estimated by the CBO, a first since the fourth quarter of 2007. Potential GDP growth is calculated by analyzing the number of individuals in the labor force and their productivity. When an economy’s actual GDP meets its potential GDP, this suggests that resources are being used at near-maximum efficiency.
The rosy economic picture signifies a major political win for President Donald Trump, who repeatedly attacked his predecessor over the U.S.’s post-recession recovery. Wednesday’s revised GDP data from the Commerce Department, which helped inform the CBO’s analysis, complements the nation’s 17-year low unemployment rate.
Trump remarked on the benefits of strong growth for American families during an August speech on tax reform in Springfield, Mo.
“If we achieve sustained 3 percent growth, that means 12 million new jobs and $10 trillion of new economic activity over the next decade,” Trump said. “That’s some numbers.”
Investment in various equipment and software, along with government spending, are seen as the primary drivers behind the nation’s economic health, according to the Wall Street Journal. Business earnings also strengthened last quarter as well, with after-tax corporate profits rising to 4.9 percent.
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