The Economy Revs Up
The Wall Street Journal
December 8, 2017
The Labor Department reported Friday that the U.S. created 228,000 net new jobs in November, in the latest sign that the American economy is growing at a healthier pace.
There’s little doubt now that the economy has reached a higher growth plane over the past nine or so months. Growth in GDP hit 3% in the second and third quarters, and all signs point to another in the fourth quarter. That would mark the first such string of 3% quarters since 2014, after which growth fell back to the 2% range.
The rising growth is touching most industries and parts of the country. Manufacturing is healthy—note to Donald Trump and Commerce Secretary Wilbur Ross —thanks to growth abroad and rising exports. The housing market is doing well overall, and consumer confidence is high.
The best news may be the surge in small business optimism that began with the election and has persisted, as measured by the National Federation of Independent Business.
The jobless rate among college graduates is down to 2.1%, which has to be near full employment and is close to the lowest since before the 2008 recession. Even more striking is the rapid decline in the jobless rate among workers over age 25 without a high school diploma.
But the biggest change has been in U.S. economic policy, notably the Trump Administration’s deregulatory efforts and the boost they have given business confidence. Barack Obama’s economists dismissed regulation as a minor concern, and even called it a boon to growth, but the costs of compliance were real and added to uncertainty. Businesses held back because they didn’t know how or when government might strike next, which contributed to historically low levels of capital investment in this expansion.
That has begun to change, and the main promise of tax reform is to create the incentive to produce an investment surge.
But for now U.S. economic portents look as good as they have in years. If Congress can get its tax reform over the finish line without watering down its pro-growth elements, “secular stagnation” may go down in history as one more failed progressive diagnosis.