The Trump economy is off to a strong start.
Since the spring, growth in gross domestic product has averaged about 3% – much stronger than either during the Bush or Obama presidencies.
This winter, consumers are likely to pull back again to pay off credit-card balances accumulated during the holiday shopping season. After that, confidence buoyed by a stronger job market and optimism lifted by more robust exports and stock prices should propel household and business spending and GDP growth into the 3% range again.
Overall, the annual growth trajectory has risen to an average of 2.5% to 2.7%, and taken on new, healthier characteristics.
The Obama expansion depended heavily on subsidies to boost employment in health care, a bailout for the auto industry, and huge investments in the oil and gas sector instigated by enhanced recovery methods.
Limits on Washington's financial resources will compel a tighter rein on health-care spending and hiring. Quite apart from ending the individual mandate, look for Republicans to further tweak Obamacare and reimbursements.
Having replaced vehicles that grew old during the Great Recession and successfully shifted drivers to more durable and fuel-efficient SUVs, automakers' annual sales have flattened. To stay relevant to growth, Detroit must roll out more electric vehicles and advanced computer-assisted drive features – and become less hidebound as competition emerges from well-funded Chinese startups.
The recovery in oil prices revived drilling but petroleum investment is not growing at the pace experienced during the boom years. The earlier swoon in prices and impatience among investors compelled producers to learn to extract oil more efficiently. And much of the infrastructure that supports an expanded oil and gas sector was put in place earlier in the decade.
The president's recent decision to free up leasing offshore will take several years to implement and faces an uncertain future if the Republican Party fails to hold control of Congress in 2018 and the presidency in 2020.
