The Bureau of Economic Analysis (BEA), who track GDP -and- U.S. Labor Department (DoL) Bureau of Labor and Statistics (BLS), who track wage growth, have released the initial sets of analysis for Quarter 1 of this year (Jan-March). The first quarter growth in GDP comes in at 2.3%. [Most estimates initially expected 2.0% or slightly less.]
CBS – […] It’s common for economic growth to slow in the first quarter and then accelerate later in the year. Still, the January-March increase was better than expected: Economists had foreseen a 2 percent annualized rate. In the current quarter, economists expect growth to surpass 3 percent.
The 2.3% first quarter result puts 2018 on track to achieve President Trump’s targeted growth rate: over three percent combined growth for the full year. Due to seasonal fluctuations the first quarter is historically the weakest for GDP growth. The second quarter will likely rebound well above 3.5% as the historic Q1 -vs- Q2 trend shows above.
One of the positive factors driving the strong Q1 outcome was growth in exports that helps to offset climbing imported purchases, and the continued trade deficits which POTUS Trump is confronting.
Additionally, beyond the strong GDP result, we see a very positive sign in wage growth. Year-over-year wage growth well exceeded expectations at 2.9%
Compensation costs for private industry workers increased 2.8 percent over the year. Wages and salaries increased 2.9 percent for the current 12-month period. (link)
Continual wage growth is a part of President Trump’s MAGAnomic policy; and remember the lowered tax rates went into effect in December. Meaning Q1 wages were higher and simultaneously income tax withholding on those wages are lower… that means more take home pay. Emphasis: More Take-Home Pay!!
CTH has been predicting that MAGAnomics as applied would mean in “Quarter Two” of this year we would begin the period of strongest wage rate growth in three decades. [ FYI, that’s right now ] We have repeatedly predicted that April through June 2018 is the beginning of “the big lift” in blue-collar wages.
A key part of the America-First MAGAnomic ‘Main Street’ policy is to protect the middle-class by driving wages up at a faster rate than the rate of inflation.
This is how the middle-class is able to afford a higher standard of living, and simultaneously ‘savers’ will gain higher rates of return on their savings.
For 30 years economic policy was doing exactly the opposite; now, with MAGAnomics in full swing, we are reversing that trend. CNBC begins to note the activity:
CNBC – […] According to surveys, the tax cuts did not reflect on many workers’ paychecks until late in the first quarter. Income at the disposal of households increased at a 3.4 percent rate in the first quarter, accelerating from the fourth quarter’s 1.1 percent pace. Households also boosted savings during the quarter. (link)