2Q GDP growth hits 2.6 percent, which means only a little for two reasons

I think it's important as we assess a new presidency that we very much hope will be successful not to lose our perspective on certain things, especially when that means we might forget about the real goals we have to be shooting for. Apparently we'll get an official announcement pretty soon that second quarter economic growth will come in at 2.6 percent. That's considerably better than the average of just under 2.0 percent that we saw throughout the Obama presidency, and it's way better than the first quarter figure of 1.2 percent, which you might reasonably call the last Obama quarter since he was president when it started and none of Trump's economic policies were in effect by the end of March.

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President Trump himself sees it as an encouraging sign:

"That's so much higher than anticipated," Trump said of the 2.6 percent annual growth rate in the gross domestic product for the April-June quarter. That figure, released by the Bureau of Economic Analysis last week, was right in line with forecasters' expectations. "Remember I was saying we're going to try and hit 3 percent some time over the next period? Well, 2.6 is getting closer ... closer than we thought, and a lot faster than we thought," Trump said at a meeting with small business leaders at the White House. "But don't worry about the three, we're going to be higher than three in the not-too-distant future."

OK. For now I'll take the president's word for it, although he can only do so much to control whether it happens or not. But while it's his job to talk up optimism in the economy - and he'd be irresponsible not to - let's not allow the Obama "new normal" to distort our understanding of what constitutes solid growth. What we need to achieve sustained prosperity is 3.0 percent growth at a minimum. We should frequently top 4.0 percent, and it should not be an earth-shattering event in a given strong quarter to see 5.0 percent. When the workforce is fully engaged and the business sector is productive, these numbers are very achievable. President Trump has probably helped move things in that direction somewhat simply by ending the federal government's legal and regulatory assaults on the business sector.

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Unholy troika: Collins, Murkowski and McCain

But 2.6 percent growth is not good. It's a step toward good, and in fairness to Trump he didn't characterize it as anything other than that. (I'm really not concerned with whether it's better or worse than "experts" expected. I'm only concerned with whether it's actually a good growth rate, and it's not that good.) Trump describes it as "getting closer" to the goal of 3.0 percent, and that's what it is. Except that 3.0 percent shouldn't be the end goal. It should be the floor. It should be the least you can do, with better performances than that happening on a regular basis. Now keep in mind: Trump hasn't actually been able to do very much yet to change these numbers, mainly because of the ineptitude of Congress. They haven't dealt with the tax code. They haven't passed a 2018 budget. They haven't repealed ObamaCare. Trump has done two important things that he had the power to do on his own. He's given the domestic energy industry a lot more freedom to extract, produce and distribute product, which has made us a major player on global markets and tremendously increased our economic power. And he's worked with Congress to get rid of a lot of anti-business regulations left over from the Obama years. Those are important moves and they have probably made a difference. But the big policy moves are yet to come and they're going to depend on Congress. Mitch McConnell claims he wants to "move on" from ObamaCare repeal so he can focus on tax policy. But I don't know why he thinks the unholy troika or Collins, Murkowski and McCain will be any more pliable on tax policy than it was on health care - and without them, he's not passing anything good. That is not Trump's fault, but it does serve as a reminder that he's only been able to make so much impact thus far. I like the direction, but don't confuse a small step in the right direction for the achievement of any worthwhile goal. We have a long way to go here.

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