Today's third estimate for 2Q2025 real GDP came in 0.5 points hotter at 3.8% on increased consumer spending:
Real GDP was revised up 0.5 percentage point from the second estimate, primarily reflecting an upward revision to consumer spending.
The big picture, however, indicates that the compound annual growth rate of real GDP from this report comes in at only 2.50% per annum for the eight years since 2Q2017. The corresponding figure for the sixty years 1947-2007 is 3.45% per annum. Economic growth since the year of the Trump Tax Reform late in 2017 therefore undershoots that post-war rate by 27.5%.
And measured from 2007 instead of 2017, real GDP growth has been even worse. Over the eighteen years since 2Q2007, real GDP has grown at a compound annual rate of just 1.97%, almost 43% worse than the pre-2007 rate of 3.45%.
Lower economic growth since the Great Financial Crisis remains the great unsolved economic problem of our time.
People who say "Just wait for the Trump tax cuts of 2025 to kick in" don't get it. There's nothing broadly, fundamentally, permanently different coming down the pike from that legislation. It's a continuation of the 2017 legislation, plus some temporary sweeteners.
A serious country would care about all this, but that would not be us.
