Today’s data from the Bureau of Economic Analysis (BEA) on growth in gross domestic product (GDP—the widest measure of economic activity) gives us the first look at evidence to assess the effect of the Trump/Ryan tax cut passed at the end of 2017. While the direct benefits of this tax cut clearly went disproportionately to the top 1 percent, proponents of these cuts claimed that large benefits would trickle down to the rest of us in the form of increased economic activity. The evidence from past tax cuts strongly suggested there would be little-to-no economic payoff in this form. Today’s GDP data largely confirms this.

Overall, GDP grew at a 2.3 percent annualized rate in the first three months of 2018, down from 2.9 percent growth in the last quarter of 2017. The component of GDP that the proponents of the tax cuts argued would respond most strongly to their passage was business investment. In the first quarter of 2018, the pace of growth of non-residential fixed investment actually decelerated slightly relative to the final quarter of 2017, falling from 6.8 percent to 6.1 percent. Some would claim that investment in the last quarter of 2017 was also influenced by expectations of the tax cut, making this comparison unfair. But investment growth also slowed when measured as the change from the same quarter in the previous year—falling from 5.4 percent in the last quarter of 2017 to 4.6 percent in the first three months of 2018. In short, there is nothing in today’s GDP report to indicate that the tax cut is working to boost economic growth or investment.

The deceleration in GDP in the first quarter of 2018 is particularly striking given that volatile inventory investment added substantially to growth in this quarter. Final sales—GDP stripping out volatile inventory investment—grew at just 1.9 percent. Key weakness in this report was in motor vehicles and parts, which subtracted 0.25 percent from the quarter’s growth rate.

Finally, there was a striking deceleration of “core” inflation measures in this report (prices excluding volatile food and energy). The year-over-year change in the price index for personal consumption expenditures—the measure that is targeted for 2 percent growth by the Federal Reserve—was just 1.5 percent, down from 1.9 percent in the preceding quarter. Yet again, the price data indicates that the economy is likely not running at full capacity.