Issue link: http://palletcentral.uberflip.com/i/860755
t the NWPCA Annual Leadership Conference, I discussed some of the potential actions by the Trump Administration that would affect the overall economic situation in 2017-18. Although the administration has taken some action to reduce regulations, major legislation has not happened. The proposed budget, which would boost spending on infrastructure and defense, is moving slowly through Congress. A significant change in the tax structure will not be introduced until September at the earliest. The promised replacement for Obamacare is struggling to move through the Senate. Thus, policy actions to date are not going to change the overall course of the economy through 2018, given the lag between policy changes and economic growth. Even so, the economy is doing quite well and should be healthy through 2018. Overall economic growth (as measured by Gross Domestic Product – GDP) is holding steady near 2%. Consumer spending is very healthy and is growing at 3.1%. The recent employment reports indicate this growth should continue. The really good news has been the rebound in business investment – now growing near 3% as well. The rest of the economy, however, continues to hold back overall growth. Residential investment is not growing. Government spending has actually declined. The surprise has been the decline in state and local government spending, since their tax revenue has been growing. Finally the trade deficit continues to get bigger. Imports continue to grow faster than exports. Net exports fell another $36 billion over the last year. Even so, industrial production has finally started to improve. Recent declines in the U.S. exchange rate should support stronger growth later this year. About as Good as It Gets Although 2% growth does not appear too strong by historic standards, it is really close to or above the new potential growth trend in the economy. Trend growth is determined by the underlying growth in the labor force and productivity of that labor force. Trend growth for the 1947-2008 period was near 3%/year. In that period, productivity growth averaged 1.4% and labor force growth was 1.7% per year. Unfortunately, there has been a significant decline in the growth 26 PalletCentral • July-August 2017 palletcentral.com Modest Growth Will Continue By Lynn Michaelis ECONOMY A