Just Like That, The Gigantic Positives Vanished

If you remember 2018’s economic “boom”, you’ll likely recall that year’s second quarter. Set up by December 2017’s Tax Cut and Jobs Act, when the BEA published GDP estimates for those three months that July, the unusual 4% growth rate seemed to have confirmed the positive effects of tax reform “stimulus” funded by a substantial increase in the fiscal deficit. While some pondered the possible downside of “too many” Treasuries, most preferred to see it the same way Jay Powell and Donald Trump did.

What makes a real boom, however, isn’t a single quarter at 4%; it is the continuation of that trend, an accelerating one whereby one four is followed with a five or more for several quarters in a string lasting years, given just how long the economy had been languishing by then.

Instead, this “boom” deserved every bit of those scare quotes because Q2 2018, just as the (euro)dollar was beginning to wreck everything, it proved to be once again the lone exception. This singular quarter that, truth be told, wasn’t even all that good; four percent used to be a downside number. It just looked awesome compared to the lack of growth which has otherwise populated the current, unbroken post-crisis climate.

Pouring salt in the wound, the BEA eventually erased that 4% altogether; with two subsequent benchmark revisions since, right now the government says real GDP growth during the three months April to June 2018 amounted to just 2.66%. The best quarters actually are found the two immediately prior, more consistent with financial indications including the dollar’s exchange value bottoming out and demarcating the best Reflation #3 would ever get.

Even now, neither of those topped 4%, either. So much for “globally synchronized growth.” Credit to the BEA, they seemed to have eventually got both the timing right as well as have captured the unsatisfyingly low high-water mark for that epoch.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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