For the last two quarters, since the Trump administration has discarded 860 regulations, US GDP has grown by 3.0%. Along with 1.8 million jobs being created since Trump took office, businesses may also be optimistic because of the Republican tax bills that provide great corporate tax relief.
Goldman Sachs analysts are forecasting US GDP growth to come in at 2.5% in 2018, up from the 2.2% forecast for 2017. Fox News reported that US GDP grew at 1.6% in 2016. Goldman analysts also predicted unemployment will be at 3.7% at the end of next year and that the Federal Reserve will raise interest rates four times in 2018. Currently, the unemployment rate is 4.1%, the lowest level since December 2000.
The unemployment rate hit record lows in thirteen states this year, the lowest levels ever recorded since the federal government began keeping track of state-level data more than four decades ago. Fox News reported that the US economy has gained momentum over the last year, with major US stock indexes all trading around record levels. Rep. Kevin Brady (R-TX) told Fox Business’ Stuart Varney that if the House tax reform bill were passed today, “Most economists believe it [the U.S. economy] will grow by about a half percent at a minimum.”
In analyzing the House and Senate tax bills, the Heritage Foundation found that the House bill is projected to boost long-run GDP by 2.6%, and the Senate version is expected to increase long-run GDP by 2.8%. This increase in GDP “translates into an increase of $4,000 to $4,400 per household.”
Furthermore, Heritage emphasized the importance of the lowering of the corporate tax in the final bill because of the positive effects on investment and a higher steady-state level of capital. In addition, the lowering of the income tax rate, as is being proposed, would increase the number of job opportunities that are economically worthwhile, with more hours worked. Overall, a new and simplified tax structure combined with a decrease in spending (which will be worked on next year) and a deregulated economy has many economic analysts looking optimistically toward the future.