U.S. economy seen strong in 2018, to slow in 2019 -CBO

WASHINGTON, Aug 13 (Reuters) - U.S. economic growth will probably accelerate this year before slowing in 2019 to well below the Trump administration's 3 percent target as a fiscal stimulus fades, congressional researchers projected on Monday.

In an updated economic outlook, the nonpartisan Congressional Budget Office (CBO) projected that inflation adjusted or real gross domestic product (GDP) would grow 3.1 percent this year, exceeding 2.2 percent growth in 2017 due to lower income taxes, increased government spending and private investment.

The government slashed corporate and personal income taxes in January in a $1.5 trillion package and the U.S. Congress passed a $1.3 trillion spending bill in March.

This has buoyed consumer and business spending as well as government outlays, which combined with accelerated soybean exports to lift the economy to a 4.1 percent annualized rate in the second quarter from a 2.2 percent pace in the January-March period. The April-June growth rate was the highest in nearly four years.

But the CBO said it expected growth to slow in the second half as jolts to consumer spending and agricultural exports either fade or reverse. For instance, some second-quarter soybean exports were aimed at beating Chinese tariffs that took effect in July and cut future shipments.

51 PHOTOS
The economy of every US state and DC
See Gallery
The economy of every US state and DC

51. South Dakota

South Dakota was only one of two states with negative GDP growth in Q4 2017, with the state's GDP declining by 0.5%. The state's April 2018 average weekly wage of $754 was fourth-lowest in the country, but its unemployment rate of 3.4% was lower than the average rate of 4.0% among the states and DC. 

Photo credit: Getty

50. North Dakota

North Dakota had the worst year-over-year change in its labor market among the 50 states and DC, with the number of non-farm payroll jobs declining by 1.8% between April 2017 and April 2018. The state also had the worst economic growth, with GDP falling 1.3% in Q4 2017. 

Photo credit: Getty

49. Mississippi

Mississippi's Q4 2017 GDP per capita of $37,997 and April 2018 average weekly wage of $709 were both the lowest among the states and DC. 

Photo credit: Getty

48. New Mexico

New Mexico's April 2018 unemployment rate of 5.4% was tied for third-highest among the 50 states and DC, while its average weekly wage of $744 was third-lowest. 

Photo credit: Getty

47. Kentucky

Kentucky had the sixth-lowest rate of jobs growth among the 50 states and DC, with non-farm payroll jobs increasing just 0.4% between April 2017 and April 2018. The state's Q4 2017 GDP per capita of $46,234 was the seventh-lowest in the country. 

Photo credit: AOL 

46. Delaware

Delaware's Q4 2017 GDP growth of 0.2% was the fourth-lowest among the 50 states and DC, and its average hourly wage growth of 0.8% between April 2017 and April 2018 was the fifth-lowest. However, the state's Q4 2017 per capita GDP of $77,945 was the fourth-highest in the country. 

Photo credit: Getty

45. Alaska

Alaska's April 2018 unemployment rate of 7.3% was the highest among the 50 states and DC, and it was one of the only two states to lose jobs between April 2017 and April 2018, with non-farm payroll employment declining by 0.2%

Photo credit: Getty

44. Arkansas

Arkansas' Q4 2017 per capita GDP of $42,028 and April 2018 average weekly wage of $743 were both the second-lowest among the 50 states and DC. 

Photo credit: AOL 

43. Montana

Montana's job growth rate of 0.6% between April 2017 and April 2018, its Q4 2017 per capita GDP of $46,268, and its April 2018 average weekly wage of $790 were all the eighth-lowest among the 50 states and DC. 

Photo credit: AOL 

42. Iowa

Iowa's Q4 2017 GDP growth rate of 0.7% was the fifth-lowest among the 50 states and DC, and its wage growth rate of 1.0% between April 2017 and April 2018 was the sixth-lowest. On the bright side, the state's 2.8% unemployment rate in April 2018 was the fifth-best in the country. 

Photo credit: Getty

41. West Virginia

West Virginia's Q4 2017 per capita GDP of $43,377 was the fourth-lowest among the 50 states and DC, and its April 2018 unemployment rate of 5.4% was tied for third-highest. 

Photo credit: Getty

40. Minnesota

Minnesota was one of only two states with negative wage growth, with the state's average weekly wage declining 0.4% between April 2017 and April 2018. Minnesota's Q4 2017 GDP growth rate of 1.5% was also somewhat below the average rate of 2.3% among the 50 states and DC. 

Photo credit: Getty

39. Michigan

Michigan's April 2018 unemployment rate of 4.7% was tied for eighth-highest in the country. The state's April 2018 average weekly wage of $885 was slightly below the average of $908 among the 50 states and DC. 

Photo credit: AOL 

38. New York

While New York's Q4 2017 per capita GDP of $78,810 was the second-highest among the 50 states and DC, its flat GDP growth rate of 0.0% during that quarter was the third-lowest. 

Photo credit: Getty

37. Ohio

Ohio's Q4 2017 per capita GDP of $56,703 was a bit below the average of $60,263 among the 50 states and DC, while its 4.1% wage growth between April 2017 and April 2018 was a bit above the average growth rate of 3.3%. 

Photo credit: Getty

36. Nebraska

Nebraska's Q4 2017 GDP growth rate of 0.9% was the sixth-lowest among the states and DC, and its April 2018 unemployment rate of 2.8% was tied for fifth-lowest.

Nebraska fell pretty far since our last ranking of the state economies earlier this year, when it came in as the eighth-best economy in the country on the strength of high wage growth in that quarter.

Photo credit: Getty

35. Vermont

While Vermont had the third-lowest rate of job growth among the states and DC, with non-farm payroll jobs increasing just 0.2% between April 2017 and April 2018, the state's April 2018 unemployment rate of 2.8% was tied for fifth-best. 

Photo credit: Getty

34. Alabama

Alabama's Q4 2017 per capita GDP of $43,880 was the fifth-lowest among the states and DC. The state's April 2018 unemployment rate of 3.8% was slightly lower than the average rate of 4.0%. 

Photo credit: Getty

33. New Hampshire

New Hampshire was one of only two states to see negative wage growth, with the average weekly wage falling 1.8%between April 2017 and April 2018. On the bright side, the state's April 2018 unemployment rate of 2.6% was tied for second-best among the 50 states and DC. 

Photo credit: Getty

32. Missouri

Missouri's April 2018 average weekly wage of $838 was a bit below the average of $908 among the 50 states and DC, while its April 2018 unemployment rate of 3.6% was a bit better than the average rate of 4.0%. 

Photo credit: AOL 

31. Oklahoma

Oklahoma's Q4 2017 GDP growth rate of 3.3% was the sixth-highest among the states and DC, but its average weekly wage growth rate of 1.0% between April 2017 and April 2018 was the seventh-lowest. 

Photo credit: Getty

30. Louisiana

Louisiana's average weekly wage growth of 4.9% between April 2017 and April 2018 was the ninth-highest among the states and DC, but its April 2018 unemployment rate of 4.5% was above the average rate of 4.0%. 

Photo credit: Getty

28. Pennsylvania

Pennsylvania's April 2018 unemployment rate of 4.7%was tied for eighth-highest in the country, and its Q4 2017 per capita GDP of $59,941 was close to the average per capita GDP of $60,263 among the 50 states and DC. 

Photo credit: Getty

28. Nevada

Nevada had the fastest job growth among the 50 states and DC, with the number of non-farm payroll jobs increasing 3.4% between April 2017 and April 2018. However, the state's April 2018 average weekly wage of $783 was the sixth-lowest in the country. 

Photo credit: Getty

27. Connecticut

Connecticut's Q4 2017 per capita GDP of $74,098 was the fifth-highest among the 50 states and DC, and its April 2018 average weekly wage of $1,086 was fourth-highest. However, the state's non-farm payroll job growth rate of 0.5% between April 2017 and April 2018 was the seventh-lowest. 

Photo credit: Getty

26. Arizona

Arizona's Q4 2017 GDP growth rate of 3.1% was the eighth-highest among the states and DC, and its non-farm payroll job growth rate of 2.2% between April 2017 and April 2018 was the seventh-highest. However, the state's April 2018 unemployment rate of 4.9% was tied for fifth-worst. 

Photo credit: Getty

25. Maine

Maine's April 2018 unemployment rate of 2.7% was the fourth-lowest among the states and DC, and its Q4 2017 per capita GDP of $46,799 was the tenth-lowest. 

Photo credit: Getty

24. Kansas

Kansas' non-farm payroll job growth rate of 1.4% between April 2017 and April 2018 was just above the average rate among the states and DC of 1.3%, and its Q4 2017 GDP growth rate of 2.3% was equal to the average rate. 

Photo credit: AOL 

23. Tennessee

Tennessee's April 2018 unemployment rate of 3.4% was below the average rate among the states and DC of 4.0%, but its Q4 2017 per capita GDP of $52,407 was somewhat lower than the average of $60,263. 

Photo credit: AOL 

22. Illinois

Illinois' non-farm payroll job growth rate of 0.9%between April 2017 and April 2018 was a bit below the average rate of 1.3% among the 50 states and DC, but its Q4 2017 per capita GDP of $65,274 was somewhat above the average of $60,263. 

Photo credit: AOL

21. Oregon

Oregon's Q4 2017 GDP growth rate of 3.7% was the third-highest among the states and DC, but its average weekly wage growth of 1.1% between April 2017 and April 2018 was the eighth-lowest. 

Photo credit: Getty

20. North Carolina

North Carolina's April 2018 unemployment rate of 4.4%was higher than the average rate among the states and DC of 4.0%, and its Q4 2017 GDP growth rate of 2.9% was higher than the average rate of 2.3%. 

Photo credit: Getty

19. New Jersey

New Jersey's Q4 2017 per capita GDP of $66,840 was the eleventh-highest among the states and DC, and its April 2018 average weekly wage of $1,023 was the eighth-highest. 

Photo credit: Getty

18. Virginia

Virginia's April 2018 average weekly wage of $994 was the tenth-highest in the country, and its unemployment rate of 3.3% was well below the average rate of 4.0% among the 50 states and DC. 

Photo credit: Getty

17. Rhode Island

Rhode Island's 5.3% average weekly wage growthbetween April 2017 and April 2018 was the seventh-highest in the country, but its April 2018 unemployment rate of 4.5% was higher than the average rate among the 50 states and DC of 4.0%. 

Photo credit: Getty

16. Wyoming

Wyoming's Q4 2017 per capita GDP of $71,403 was the eighth-highest in the country, while its April 2018 unemployment rate of 3.8% was just below the average rate among the 50 states and DC of 4.0%. 

Photo credit: Getty

15. Indiana

Indiana's Q4 2017 GDP growth rate of 2.7% was a bit higher than the average rate of 2.4% among the 50 states and DC, while its April 2018 unemployment rate of 3.2%was below the average 4.0% rate. 

Photo credit: Getty

14. Maryland

Maryland's April 2018 average weekly wage of $1,042 was the sixth-highest among the 50 states and DC, and its wage growth rate of 7.5% between April 2017 and April 2018 was the highest. 

Photo credit: Getty

13. South Carolina

South Carolina's average weekly wage growth rate of 6.4% between April 2017 and April 2018 was the fourth-highest among the states and DC, but its Q4 2017 per capita GDP of $44,228 was the sixth-lowest. 

Photo credit: Getty

12. Florida

Florida's Q4 2017 GDP growth rate of 3.7% was the third-highest among the states and DC, and its non-farm payroll job growth rate of 2.1% between April 2017 and April 2018 was the ninth-highest. 

Photo credit: Getty

11. Georgia

Georgia's average weekly wage growth rate of 6.0%between April 2017 and April 2018 was the sixth-highest in the country, and its non-farm payroll job growth rate of 1.5% over that year was slightly above the average rate of 1.3% among the 50 states and DC. 

Photo credit: Getty

10. Wisconsin

Wisconsin's April 2018 unemployment rate of 2.8% was tied for fifth-lowest among the states and DC, and its Q4 2017 GDP growth rate of 3.1% was tied for eighth-highest. 

Photo credit: Getty

9. Utah

Utah's non-farm payroll job growth rate of 3.3% between April 2017 and April 2018 was the third-highest in the country, and its April 2018 unemployment rate of 3.1%was well below the average rate among the 50 states and DC of 4.0%. 

Photo credit: AOL 

8. Massachusetts

Massachusetts' Q4 2017 per capita GDP of $78,300 and April 2018 average weekly wage of $1,116 were both the third-highest among the 50 states and DC. 

Photo credit: Getty

7. California

California's Q4 2017 GDP growth rate of 3.4% was the fifth-highest among the states and DC, as was its April 2018 average weekly wage of $1,073

Photo credit: Getty

6. Idaho

Idaho's non-farm payroll job growth rate of 3.3% between April 2017 and April 2018 was the second-highest among the states and DC, as was its Q4 2017 GDP growth rate of 4.8%.

Idaho fared much better in this quarter's ranking than in our first-quarter ranking of the state economies, when it came in at number 20. 

Photo credit: Getty

5. Hawaii

Hawaii's 2.0% unemployment rate in April 2018 was the lowest among the 50 states and DC, and its average weekly wage growth rate of 6.1% between April 2017 and April 2018 was the fifth-highest. 

Photo credit: Getty

4. Texas

Texas' Q4 2017 GDP growth rate of 5.2% was the highest among the 50 states and DC, and its non-farm payroll job growth rate of 2.7% between April 2017 and April 2018 was fifth-highest. 

Photo credit: Getty

3. Colorado

Colorado's Q4 2017 GDP growth rate of 3.2% was the seventh-highest among the states and DC, and its April 2018 unemployment rate of 2.9% was the ninth-lowest. 

Photo credit: Getty

2. Washington

Washington state's April 2018 average weekly wage of $1,168 was the second-highest among the states and DC, and its non-farm payroll job growth rate of 2.8% between April 2017 and April 2018 was the fourth-highest. 

Photo credit: Getty 

1. Washington, DC

The District of Columbia's Q4 2017 per capita GDP of $193,091 and April 2018 average weekly wage of $1,552were far and away the highest in the country. However, DC's April 2018 unemployment rate of 5.6% was the second-highest among the states and DC. 

Photo credit: Getty

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

"In 2019, the pace of GDP growth slows to 2.4 percent in the agency's forecast, as growth in business investment and government purchases slows," CBO director Keith Hall said in a statement.

Republicans have said the tax cuts, which increased the nation's debt, would pay for themselves through strong economic growth. The Trump administration has said the economy can sustain 3.0 percent growth over the long term, an assertion many economists have disputed.

The CBO also cautioned that trade tensions could make a bigger dent on GDP growth than anticipated. An escalating U.S.-China trade war could result in tariffs on all goods traded between the world's two largest economies.

Washington also has traded tariffs with the European Union, Canada and Mexico.

"When CBO completed this economic forecast in early July, the agency estimated that the macroeconomic consequences of the U.S. tariffs and foreign retaliatory tariffs that had been implemented at that time would be small," said Hall.

Tariffs then "affected goods that accounted for less than 1.5 percent of the total value of U.S. trade. However, trade policy has already changed since early July and may continue to evolve, so the effects of new tariffs may become more substantial and have a larger effect on the economy than CBO accounted for in its current projections."

From 2023 to 2028, the CBO forecast the economy growing by about 1.7 percent each year.

(Reporting By Lucia Mutikani; Editing by David Gregorio)

Read Full Story