Thread by @jimtankersley

In honor of the now-departed @Wonkblog (RIP), a brief wonk-thread about economic projections, tax cuts and two rapidly diverging theories of the economy. Also, the Trump re-elect. 1/

Last year, after the passage of President Trump's signature tax cuts -- and a bipartisan bill to boost defense and other fed spending -- the White House projected 3.1% growth for 2018. @USCBO projected 3.3%. We don't have final numbers yet, but it's looks like they were ~right 2/

@USCBO The similarity of the projections hid the very different way the forecasters view the US economy.

CBO sees a baseline long run growth rate of ~1.7%, boosted last yr by fiscal stimulus

WH sees a higher baseline, further boosted by supply-side effects of tax cuts/deregulation 3/

@USCBO Now we come to Year 2 of the tax cuts, and the forecasts diverge.

And so we start finding out who is right. 4/

@USCBO CBO, the Fed and others see ~2.3% growth this year, because stimulus is fading and the global economy (incl trade war) is a headwind

WH sees ... 3% growth. 5/

@USCBO As Kevin Hassett, the chief WH economist, put it to me: “Last year looked just like we thought, so we don’t think, going into our next forecast, that there’s a heck of a lot of reason to change our mind about things." 6/

@USCBO MEANWHILE, economists on @KentSmetters' team say the reason for the growth surge last year had more to do with oil prices than tax cuts, because oil is such a huge driver of American investment now. Which would be bad news for growth this yr, bc prices have dropped. 7/

Bottom line: the Trump administration is way more optimistic about growth this year than CBO, Fed and others. The big driver of growth *might* be the outside force of oil prices. And whether Team Trump is correct could really matter for 2020:

nytimes.com/2019/01/29/bus… 8/

Bonus list: Ronald Reagan was the last U.S. president to rally from an approval rate ~40% (like Trump now) at the start of Year 3 of his first term, then win re-election. Here are the quarterly real GDP growth rates for the start of his 3rd yr - re-elect vote.