Some Good News: Government Spending Fell in Last Three Months


In Trump’s first quarter back in office, he managed not only to slow government purchases, but to decrease them slightly—the first time in three years. That shows up as a subtraction to GDP.

Unleash Prosperity Hotline – The U.S. GDP shrank slightly in the first quarter - something we never like to see. This data predates the last four weeks of the trade/tariff war trauma, so we are worried about the second quarter coming in negative - which would technically mean recession. If we could get the tax bill signed sealed and delivered, that would provide immediate juice for the economy. Instead, Congress dithers, and they will get blamed for the technical recession.

But there was some good news in the report. Much of the “growth” under Biden was “fake growth” driven by trillions of extra government spending and debt.

In Trump’s first quarter back in office, he managed not only to slow government purchases, but to decrease them slightly—the first time in three years. That shows up as a subtraction to GDP.

But here’s the showstopper: investment (the impetus of long-run real economic growth) soared, up 22% at a seasonally adjusted annualized rate. This is the rocket fuel for future growth that America needs. This was the opposite of tepid business investment under Biden.

On balance, a quarter with surging investment and slowing government is not bad at all.
 
Economist Stephen Moore by is licensed under
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