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The U.S. economy is slowing. The Commerce Department says the annual rate of growth went from about 3% last year into about 2% in recent months. Most analysts do not predict calamity, but many do see a trend of slower growth. And that's different from the Trump administration's promise of economic boom times. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Part of what appears to be happening is that those Republican tax cuts from a year and a half ago, if they were giving the economy a boost, that's wearing off. That wasn't what was supposed to happen, according to President Trump. Here he is talking before boarding an aircraft back in 2017 when he was pushing for those tax cuts.
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PRESIDENT DONALD TRUMP: The economy now has hit 3%. Nobody thought it would be anywhere close. I think we can go to four, five and maybe even 6% ultimately. Each percentage point is two and a half trillion dollars. We are back. We're really going to start to rock.
ARNOLD: Each percentage point of GDP growth is actually way less than that. That number isn't right. But the promise was clear.
BETSEY STEVENSON: What Donald Trump was talking about there is he believed that the tax cuts would unleash unprecedented investment by businesses that would set forth a stream of growth well into the future.
ARNOLD: That's Betsey Stevenson, a University of Michigan economist who was an adviser in the Obama White House. She says this wave of business investment sparking a new era of remarkable growth, that didn't happen. And in this latest report, spending by businesses actually was particularly weak.
STEVENSON: And that's where the tax cuts have been really disappointing.
ARNOLD: Now, in 2018, the economy did manage about 3% growth. That was better than most of the prior decade, which averaged closer to around 2%. But now, many economists say the trend is heading back down, and they're predicting a return to that more ho-hum rate of growth. Now, 2% versus 3% growth, is that even such a big deal?
STEVENSON: Two to 3%, that sounds like, oh, that's just small.
ARNOLD: Stevenson says, though, it's actually a huge difference. Three percent growth is 50% faster than 2% growth, right?
STEVENSON: Fifty percent faster growth.
ARNOLD: I see. So it's like, you know, driving down the freeway at 40 miles an hour or driving at 60. You're getting where you're going a lot quicker.
STEVENSON: Yeah, that's a great analogy. If you look back over 10 years, you're going to be in a very different place if we were growing at 3% than if we were growing at 2%.
ARNOLD: Meaning more money flowing into businesses, which could lift wages, standard of living. But again, that burst of 3% growth appears to be fizzling. Still, all this is not to say that the economy is terrible. In fact, most analysts agree that these latest GDP numbers were reassuring, given all the headwinds - slower growth in Europe, trade fights and tariffs. Randy Kroszner is a former governor of the Federal Reserve Board.
RANDY KROSZNER: The GDP report shows that the U.S. economy is growing pretty solidly. There have been lots of concerns that we're about to go off the cliff. No evidence that we're going off the cliff.
ARNOLD: Consumer spending was strong. And even if we are returning to slower growth, Betsey Stevenson says what most people probably care most about is their jobs.
STEVENSON: The labor market is still really strong. Unemployment is low and has been low for a long time. We're starting to see some wage gains. And what's clear is it's a really good time for workers to be finding a job, asking for a raise.
ARNOLD: For his part, President Trump tweeted out, quote, "USA set to zoom." That's probably not the word most economists would use, but the economy appears at least to be in pretty good shape. Chris Arnold, NPR News.
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