During his campaign, President Donald Trump set a target of 3% economic growth for this country, but growth in the first quarter fell significantly short of that goal.
The third and final estimate of real gross domestic product came in at a mere 1.4% for the first quarter of 2017, according to the U.S. Bureau of Economic Analysis.
And that’s not the only target the new president looks likely to miss. In fact, as the president approaches the end of his first six months in office, it seems that he’s no closer to fulfilling his campaign promises than the day he took the helm of the world’s largest economy, according to an article by SP Global [paywall].
As the administration fails to hit its targets, or pass its legislation, Americans are becoming less optimistic in the future of the economy, according to the latest Index of Consumer Sentiment report from the University of Michigan.
“Relying on the long-standing truth that campaign promises aren’t, and often never become, government policy, we largely discounted last autumn’s rhetoric in our December forecast for U.S. economic growth,” said Beth Bovino, SP Global U.S. chief economist. “Now, we no longer believe the federal government will be able to push through even a small infrastructure-spending package, and we expect only moderate tax cuts to be passed early next year as midterm elections approach.”
While forecasts show the economy will continue to expand, it will occur at a much more moderate pace than previously expected as GDP increases to 2.2% for 2017 and 2.3% in 2018, Bovino said.
SP Global estimates in September the Federal Reserve will announce plans to gradually normalize its balance sheet, and says 2017 will see one more rate hike. The company forecasts the Fed will raise rates three times in 2018.
The general consensus is that the next rate hike will occur in December, though some experts are even beginning to doubt that, saying 2017 has seen the last of its increases to the federal funds rate.
On the positive side, inertia in Washington means the risks of a policy mistake have eased. SP Global predicts the chance of a recession slipped to 15% to 20%, down from the previously forecasted 20% to 25%.