Financial Focus: So What If 2nd Quarter GDP is at 4.1%

By PROF. ANTHONY RIVIECCIO, MBA, PFA

Well, I am sure by now you heard the ramblings from TV, social media, radio, and of course our President: “Our economy is growing at 4.1 percent.”

So what?

There are many things you do not hear in those 30-second soundbites. One of them is that 4.1 percent represents, the second quarter of the year (April through June), not the whole year. What if I told you after you account for the first quarter of 2018, that 4.1 percent now gets averaged to three percent for six months?

Now, don’t get me wrong. first half of the year growing at three percent is exactly what the President wanted and why the Federal Reserve Board finally slowed down in raising interest rates.

But if we’re going to measure first half measures accurately, then let’s look from 2016 to 2018:

First Half GDP growth:

2016: 1.9 percent

2017: 2.4 percent

2018: 3.1 percent

What is shocking about that growth politically? Former President Barack Obama’s last year in office was 2016!

So we’re growing! Where is it coming from the first half of the last three years?

GDP is measured as our economic output, as per consumer (60 percent) investment (20 percent), government (10 percent), spending and net exports (10 percent).

GDP components

2016 2017 2018

Consumer. 2.7%. 2.4%. 2.3%

Investment. -1.4%. 5.3%. 4.6%

Government. 1.3%. -0.4%. 1.8%

Net Exports. -0.2%. -0.2%. 4.3%

So we can see that while the Obama-led economy (at the first half of the year) was a consumer-led economy, President Donald Trump has transformed it to a business investment, export-led economy.

So, running a business investment export led the first half of 2018, what news have we heard that will probably effect the second half of 2018? The following:

* Savings is UP, which shows consumers are not spending their tax cut money.

* Businesses are expanding, creating jobs, but also giving many of the money back to their shareholders.

* Government spending has changed. As we know, the defense side of the budget has ballooned while the “social service” side is dropping.

* Trade: import tax, import tax, import tax.

So watch your 401(k)s and your other investments. The second half could be a real bumpy ride.

Anthony Rivieccio is the founder and CEO of The Financial Advisors Group, celebrating its 20th year as a fee-only financial planning firm specializing in solving ones financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, and The Bronx Chronicle. Mr Rivieccio is also currently an Adjunct Professor of Business , Finance & Accounting for both, City University of New York & Monroe College, a Private University. For financial assistance , Anthony can be reached at (347) 575-5045. Feel free to visit their FACEBOOK Business page for past Financial Focus articles: www.facebook.com/iwantmytaxmoney

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