Trump on 4.1 Percent Growth: 'An Economic Turnaround of Historic Proportions' (July 27, 2018)

On the morning of July 27, 2018, minutes after the government released its first estimate of economic growth for the second quarter, President Donald Trump walked out to the South Lawn of the White House with good news [1]. “I am thrilled to announce that, in the second quarter of this year, the United States economy grew at the amazing rate of 4.1 percent,” he said [1]. The video above shows his remarks. Quotes are from the official transcript published by the American Presidency Project [1].

Key Moments

”The amazing rate of 4.1 percent”

Trump said the economy was “on track to hit the highest annual average growth rate in over 13 years,” and that “As the trade deals come in one by one, we’re going to go a lot higher than these numbers.” He compared the result with his predecessors: “During each of the two previous administrations, we averaged just over 1.8 percent GDP growth. By contrast, we are now on track to hit an average GDP annual growth of over 3 percent, and it could be substantially over 3 percent.” He added that Larry Kudlow, director of the National Economic Council, and Kevin Hassett, chairman of the Council of Economic Advisers, had “just confirmed to me” that “these numbers are very, very sustainable. This isn’t a one-time shot” [1].

”The trade deficit … has dropped by more than $50 billion”

“Perhaps one of the biggest wins in the report, and it is indeed a big one, is that the trade deficit — very dear to my heart, because we’ve been ripped off by the world — has dropped by more than $50 billion — $52 billion, to be exact,” Trump said, adding that it was “adding — one point to GDP” [1].

”An economic turnaround of historic proportions”

“We’ve accomplished an economic turnaround of historic proportions,” he said, listing record-low unemployment rates for Black, Hispanic and Asian Americans and Americans with disabilities, the lowest rate for women “in 65 years” and for veterans “in 18 years,” and 3.7 million jobs added “since the election.” He also said business investment had grown “at only 1.8 percent” the year before he took office, “jumped to 6.3 percent” in 2017 and was “growing at 9.4 percent” in 2018 [1].

”The American economic miracle”

“Everywhere we look, we are seeing the effects of the American economic miracle,” Trump said. “We are in the midst of the longest positive job growth streak in history. New unemployment claims have recently achieved their lowest level in almost half a century” [1].

He credited his agenda. “With the help of Republicans in Congress, we passed — without one Democrat vote — the biggest tax cuts and reform in our history,” he said. “In the first 3 months after tax cuts, over $300 billion poured back into the United States from overseas.” He added: “Apple alone is bringing in $230 billion” [1].

He pointed to steel. The day before, he had been at U.S. Steel’s plant in Granite City, Illinois. “The steel industry is back. They’re open for business. And we need the steel industry. And the tariffs did it,” he said. “Since I was elected, we’ve added 400,000 new manufacturing jobs” [1].

”A boom that will be sustainable”

Trump then brought up his two top economic advisers. Hassett told him: “You said that you would bring the trade deficit down — and you have. The $50 billion reduction in the trade deficit proves that if you stand up for America’s workers and let our allies know that deals that aren’t reciprocal are unacceptable, that you can make a lot of progress” [1].

Kudlow listed the formula: “low tax rates, rollback of regulations, unleashing energy. And trade reform to fix a broken world trading system.” His verdict: “this is a boom that will be sustainable, frankly, as far as the eye can see; this is no one-shot effort” [1].

The Numbers Behind It

The Commerce Department’s Bureau of Economic Analysis put it plainly that morning: “Real gross domestic product increased at an annual rate of 4.1 percent in the second quarter of 2018.” Growth in the first quarter had been 2.2 percent, so the pace nearly doubled. The bureau said the gain reflected “positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending” [2].

The jobs numbers backed up the president’s list. Labor Department data show how far unemployment had fallen that spring:

Black Americans: unemployment fell to 5.9 percent in May 2018, then the lowest since the Bureau of Labor Statistics began the series in 1972 [3].
Hispanic Americans: 4.5 percent in June 2018, then the lowest since the series began in 1973 [4].
Asian Americans: 2.2 percent in May 2018, then the lowest in seasonally adjusted data going back to 2003 [5].
Women: 3.6 percent in May 2018, the lowest since October 1953, the “65 years” Trump cited [6].
Everyone: the overall rate hit 3.8 percent in May 2018, the lowest since April 2000 [7].

Background: The Tax Cuts and the Trade Fight

The growth came seven months after Trump signed the Tax Cuts and Jobs Act on Dec. 22, 2017. “The corporate tax rate, as you know, will be lowered from 35 to 21 percent. That means that more products will be made in the U.S.A.,” he said that day. “I consider this very much a bill for the middle class and a bill for jobs” [8].

He called it “the biggest tax cuts and reform in the history of our country,” adding: “This is bigger than, actually, President Reagan’s many years ago” [8].

On trade, Trump had put tariffs on imported steel, and he said they were already bringing plants back. On the South Lawn, he described the stakes of his trade fight: “They stole our jobs, and they plundered our wealth. But that ended” [1].

By the Numbers

4.1%: second-quarter 2018 growth in the first estimate [2].
2.2%: first-quarter growth, which the second quarter nearly doubled [2].
4.2%: second-quarter growth after the government’s third estimate [9].
2.9%: growth for all of 2018, up from 2.2 percent in 2017 [10].
5.9%: Black unemployment in May 2018, a record low at the time [3].
21%: the new corporate tax rate, down from 35 percent [8].

What Happened Next

The quarter got even better. In September 2018, the Bureau of Economic Analysis revised second-quarter growth up to 4.2 percent [9].

The year was strong. The economy grew 2.9 percent in 2018, up from 2.2 percent in 2017, according to the bureau’s initial estimate [10].

Unemployment kept falling. In September 2019, the jobless rate dropped to 3.5 percent, the lowest since December 1969 [7].

The records kept falling. In 2019, Black unemployment dropped to 5.3 percent, Hispanic unemployment to 3.9 percent and Asian unemployment to 2.0 percent, each a new low in the bureau’s data [3][4][5].

The trade deals came in. On Jan. 29, 2020, Trump signed the U.S.-Mexico-Canada Agreement into law, saying the country was “finally ending the NAFTA nightmare.” He called the USMCA “the largest, fairest, most balanced, and modern trade agreement ever achieved” [11].