The American economy is continuing its upward path, but as for growing fast enough to support the rosy projections underlying the administration's budget plan for the coming fiscal year, as the Brooklyn vernacular would put it, "Fuhgedaboudit."
The Commerce Department said gross domestic product (GDP) increased at an annual rate of 1.2 percent in the first quarter of 2017, a better rate than the preliminary estimate of 0.7 percent, but not as good as the fourth quarter 2016 pace of 2.1 percent.
Moreover, profits from current production fell by $40.3 billion in the first three months of the year, after increasing by $11.2 billion as 2016 ended.
All of which suggests that the Federal Reserve will monitor more closely economic data through the spring and summer, and will think twice before raising interest rates soon. The Fed has said several times that it would boost its key interest rates to prevent the economy from accelerating too quickly.
In contrast, the president's budget proposal anticipates strong growth that would override tax cuts even as it sharply reduces government aid and spending on a wide variety of social and environmental programs.
The proposed budget calculates strong and steady growth of more than 2 percent and as much as 3 percent every year over the next ten years that would lead to a reduced deficit and a balanced federal budget.
Clear-eyed economists and budget specialists have looked at this scenario and asked, what dream world is he living in?
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