2008 record      


The number of people filing for unemployment benefits last week came in "unexpectedly" low. Instead of 240,000 claims, there were 236,000, which marked the third week in a row this number has dropped.

That's not a big deal in the grand scheme of things. It's just one measure, after all, and the differences aren't huge.

Except it adds to a pile of "unexpectedly" good economic reports that have been coming out these days.

ADP reported that payrolls "unexpectedly" climbed 190,000 in November, while analysts had predicted 185,000.

Consumer confidence "unexpectedly" hit a 17-year high in November.

Labor costs "unexpectedly" fell in the third quarter while productivity surged. Economists thought costs would edge up by 0.3%.

Retail sales in October "unexpectedly" rose. Economists had expected them to be flat.

These are pulled just from headlines of the past few weeks. But the trend started almost as soon as President Trump took office.

Normally, it takes months for a new administration's economic policies to take effect. But there was a sharp surge in business and consumer optimism, and the stock market has been on an upward trajectory, since the day Trump got elected. The IBD/TIPP Economic Optimism Index has been in positive territory for 15 months straight. What's more, Trump was able to take immediate executive action on regulations, which sent a signal to businesses, markets and consumers alike.

Now it appears that overall economic growth for the entire year could be, you guessed it, "unexpectedly" high.

On Friday, the government will release the unemployment figures for November. But at 4.1%, the unemployment rate is already "unexpectedly" low. The consensus was that unemployment would average 4.6% for the year, but it's been under 4.6% since March.

At the start of the year, economists were in widespread agreement that inflation-adjusted GDP would grow 2% to 2.3%. The National Association of Business Economists survey put it at 2.2%. The Congressional Budget Office predicted growth would be 2.3%, as did Trump's own economists.

But annualized growth was 3.1% in the second quarter and 3.3% in the third. The Atlanta Fed's GDPNow measure, which includes economic data available for the fourth quarter up to this point, currently stands at 3.2%. If that holds for the quarter, then growth for the year would be above 2.3%. (It would also mark the first time the economy has put together three straight quarters of 3% or higher growth since 2005.)

All of this marks a sharp turnaround from the past eight years when, under President Obama's economic stewardship, GDP growth never once came close to meeting the consensus forecasts.

At the start of 2016, for example, the White House forecast 2.6% growth for the year and the CBO 2.7%. The actual number: 1.5%.

Month after month during Obama's eight years in office, economic indicators kept coming in worse than expected.

And after each disappointment, Obama would blame "headwinds" and promise that strong growth was just around the corner.

So, let's review.

Economists were continually overestimating growth under big-spending, high-taxing, regulatory-happy Obama, and underestimating growth under Trump's pro-business, tax-cutting, deregulatory policies.

One might be tempted to conclude that these economists are either ideologically biased or pretty lousy at their jobs.

At the very least, it gives one reason to be suspicious when these same economists warn that Trump's promise of 3% growth is "unrealistic," or that the economy is close to "overheating," or that tax cuts will only make things worse.

Click here to read the original article on the Investor's Business Daily website.

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