Kitchen Table Economics

GDP Growth is a Good Economic Indicator—4.1% Surge Conveys Strong Economy

The gross domestic product (GDP)—or the total value of all goods and services produced in a given year—is usually a good indicator for gauging the strength of an economy. And its growth can be influenced by a number of factors—including labor force participation, technological advances, and public policy changes in areas like regulations and taxes.

The Bureau of Economic Analysis—a subsidiary of the U.S. Department of Commerce—recently released GDP growth figures from the second quarter of 2018. According to the new report, when taking into account inflation, the U.S. GDP grew by 4.1 percent—the best growth rate since 2014.

The good economic news is likely a result of new policies that are allowing businesses to expand and innovate. Some examples include efforts to reduce government regulations that have impeded the success of small business job creators for years and the passage of the Tax Cuts and Jobs Act—which has lowered the tax burden for essentially all Americans and leveled the playing field between U.S. businesses and foreign competitors.

If Congress can pass additional legislation to extend these tax cuts indefinitely and regulatory reform continues to be pursued, GDP growth will likely remain strong.