U.S. Economy's 3% Spurt Emboldens Tax Cut Supporters (and Critics)

Republicans called the report a sign that businesses were already spending more in anticipation of a corporate tax cut, and evidence that the economy could grow faster over the long term than currently forecast.

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The complication is that faster growth could undermine the party's case that tax cuts are needed to add fuel to an economy that is already running with low unemployment -- and it could lead the Federal Reserve to increase interest rates more quickly, which could dampen the effects of any tax bill.

Liberal economists said the report showed the success of Ms. Yellen at the Fed and undermined the case for the Republican tax bill. "The underlying trend in G.D.P. growth is clearly telling us two things," Jared Bernstein, a former economic adviser to President Barack Obama who is now at the Center on Budget and Policy Priorities, said by email. "Keep on rockin' steady with Yellen at the Fed, and there's no need for a big, wasteful tax cut.''