Numbers don’t lie. But maybe they sometimes do. U.S. revised second-quarter gross domestic product (GDP) came in at three percent, but billionaire investor Warren Buffet said it certainly doesn’t feel like three percent.
According to the Commerce Department, the U.S. economy grew faster than expected in the second quarter, notching its quickest pace in more than two years. GDP increased at a three percent annual rate in the second quarter; analysts were forecasting second-quarter growth of 2.7%.
Second-quarter growth was the strongest since the first quarter of 2015 and was more than double the 1.2% pace in the first quarter of 2017. Thanks to the solid second-quarter GDP growth estimates, the U.S. economy advanced 2.1% in the first half of 2017, up from the 1.9% reported in July.
The second-quarter GDP data must be good news for President Trump. On the campaign trail, Trump said the economy had suffered under then-President Obama and that he wanted to change that. Trump promised, if elected, to juice U.S. GDP growth to a sustainable range of three to four percent.
That’s a tough target when you consider the current U.S. recovery is advancing at its slowest pace since World War II. During the Obama years, annual GDP growth averaged two percent. In the 10 previous expansions, GDP advanced 4.3% on average. In 2016, Obama’s last year in office, GDP was 1.6%.
While second-quarter GDP came in better than expected, President Trump has been unusually quiet, with no mention of the second-quarter GDP growth on Twitter or anywhere else.
There might be a reason for that. Despite being in office for seven months, President Trump has not passed any economic legislation or implemented his proposed tax plans or $1.0-trillion infrastructure plan. And chances are good that Trump’s tax reform legislation will not get passed before the end of the year either.
Despite the misses and political gridlock in Washington, the U.S. economy appears to be healthy. But not everyone is convinced.
Warren Buffet said that U.S. economic growth does not feel like three percent. Instead, Buffet said, “I would guess we’re in a 2 percent growth economy now. Every now and then we think it’s accelerating. And every now and then that maybe there’s a double dip or something. It just seems to be a couple of percent.”
“If we have 2 percent for a generation, 25 years, you would have a $19,000 GDP gain per person in the United States,” Buffet added.
“National Income and Product Accounts, Gross Domestic Product: Second Quarter 2017 (Second Estimate),” U.S. Department of Commerce, August 30, 2017.
“Warren Buffett: This doesn’t feel like a 3% GDP economy,” CNBC, August 30, 2017.