Yuck. The US economy slowed down a lot in the fourth quarter of last year. GDP growth clocked in at a hair less than 0.7 percent:
For the year, GDP increased 2.4 percent, which is pretty much what it’s been for the past six years. So overall, this isn’t crushingly bad news. It just means the economy continues to putter along without really building up any steam. That’s better than Europe or China can say. Still, in the fourth quarter growth slowed, income growth slowed, and inflation was close to zero. And, as we all know, the stock market has been tanking lately. It’s sure not looking like it was a great idea to start raising interest rates—and if the Chinese economy goes south, it’s really not going to look like it was a great idea to start raising interest rates.
Naturally we want a political spin on all this, and that’s pretty easy: If this is just a blip, and growth returns over the next two quarters, then the presidential contest will remain a close-run thing. But if the economy flags badly for the next couple of quarters, Democrats are going to have a very, very hard time holding onto the White House. Are you ready for President Trump?