Weekly Economic Update: March 19 - March 23

March 20, 2018

CHART OF THE WEEK

JEC’s Annual Report: U.S. Economy has Room for Faster Growth

In the Joint Economic Report’s opening chapter, JEC Chairman Erik Paulsen concluded that:

The JEC Majority is convinced that the U.S. economy has room to grow faster and, belatedly, experience some of the normal bounce-back from the recession. Market-oriented policies can release faster growth in the near term and better position the economy to counteract adverse long-term trends—particularly the aging population—so that it can reach a steady growth rate, closer to the historical average of somewhat over 3 percent. We have taken the first major step in that direction with tax reform, and we will continue to press on with other pro-growth policies.

JEC’s Annual Report can be found here.

Chairman's Update:

Chairman Paulsen spoke with Tom Keene and Francine Lacqua on Bloomberg Surveillance about the JEC’s new 2018 report, President Trump’s decision to hire CNBC contributor Larry Kudlow as economic adviser, and why the progress made by the Tax Cuts and Jobs Act might be threatened by new tariffs. Click below to watch.

Watch Chairman Paulsen tout JEC’s new report!

In an oped on tax reform, Chairman Paulsen argued that the economy was growing thanks to sound economic policy:

“While there has been a lot of Armageddon and doomsday rhetoric about tax reform from those with a political agenda, the reality is that it was our severely outdated tax code — not tax reform — that was hurting Minnesotans and their families. No one could defend the status quo because it was holding back our economy, keeping wages lower, and driving jobs, manufacturing and headquarters overseas."

And the Minneapolis Star Tribune took notice of the JEC’s hearing on the President’s 2018 Economic Report:

Chairman Paulsen Flexing Muscle

Click here to read the Star Tribune’s coverage of the JEC Hearing

LAST WEEK

JEC Releases

The 2018 Joint Economic Report

February Jobs Review

News & Commentary Weekly Highlights

CNBC: The Fed doesn't understand the causes of inflation: Larry Kudlow

Wall Street Journal: Lawrence Kudlow [incoming NEC chair] Is Fan and Critic of Trump’s Economic Positions

The Hill: Senate passes bipartisan bill to roll back Dodd-Frank

Top Economic Indicator Highlights

Evidence that the Economy isn't Overheating

After slowing early-to-mid 2017, the Consumer Price Index, which measures inflation, resumed an upward trend in recent months. Rising inflation rates make Fed interest rate hikes more likely. However, personal consumption expenditures, as a measure of inflation, still persistently remains below the Fed’s symmetric 2% inflation target. This implies the economy is not “overheating.” (Source: Consumer Price Index, January 2018)

Category (percentage change from same month last year)	Feb	Jan	Dec
Headline CPI	2.26%	2.14%	2.11%
Core CPI (excludes food and energy)	1.86%	1.85%	1.76%

Industrial Production: Fastest Increase since March 2011

At 4.3%, February saw the fastest year-over-year increase in industrial production since March 2011; capacity utilization rose to its highest since January 2015. The Fed’s industrial production index covers nearly everything tangible produced in the United States. (Source: Industrial Production and Capacity Utilization, February 2018)

Category	Feb	Jan	Dec
Industrial production (year-over-year percentage change)	4.3%	3.5%	3.5%
Capacity utilization (percent of capacity in active use)	78.1%	77.4%	77.8%

Industrial Production & Capacity Utilization

Help Wanted: Record Job Openings

The number of job vacancies increased substantially in January. This suggests that the U.S. economy is ramping up in the wake of the Tax Cuts and Jobs Act. (Source: Job Openings and Labor Turnover Summary (JOLTS), January 2018)

Category (seasonally adjusted levels)	Jan	Dec	Nov
Job Openings (thousands)	6,312	5,667	5,933
Hires (thousands)	5,583	5,524	5,514
Separations (thousands)	5,409	5,314	5,254