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U.S. economic growth hits fastest rate since 2014

31 July, 2018, 17:53 | Author: Ted Wilson
  • Trump Breaks Tradition on GDP Figures

Even with the relatively strong pace of growth last quarter, most economists expect expansion to settle back to near its long-run rate, and some have flagged the risk of a recession in two years.

The Fed last month estimated that the US economy would grow at 2.8 percent this year, still below the Trump administration's target of over 3 percent of annual growth rate. "I think the numbers are going to be outstanding".

Meanwhile, private investment actually fell over the second quarter - a development that contradicts the GOP's economic promises. He said somebody had predicted 5.3% growth, which he didn't think would happen, but he'd be happy with anything over around 3.7%.

However, the Council of Economic Advisers Chairman Kevin Hassett said recent growth set the stage for a stronger economy in the second half of the year.

Along with its snapshot of second-quarter GDP growth, the report will likely include a revision of the first quarter's growth estimate of a 2.0 percent rate as the government will also publish comprehensive revisions to prior GDP data. The jump in the latest period was paced by consumer spending, which rebounded to a 4.0% pace in the second quarter from the first quarter's weak 0.5% pace. Consumers began spending their higher take-home pay on autos and other big-ticket items, spurred by the $1.5 trillion tax cut Trump pushed through Congress in December.

The trade dispute with China, for example, prompted buyers to rush purchases of US soybeans before Chinese retaliatory tariffs raised costs for that key market for America's largest agricultural export, according to Bankrate.com analyst Mark Hamrick.

NZ farmers dismayed at USA farm bailout as trade war deepens
American stock markets jumped in their last half-hour of trading in response to reports of a US-EU agreement. After Trump hit China with tariffs, they responded with a 179 percent retaliatory tariff on USA sorghum.

Yes, the US economy grew in the second quarter of this year, but I am skeptical going forward.

Trump also touted a decrease in the USA trade deficit in the most recent quarter, calling it "one of the biggest wins".

Gross domestic product probably increased at a 4.1 percent annualised rate, also as business stockpiled inventory ahead of the impending import duties, according to a Reuters survey of economists. There was also that rise in consumer spending, presumably attributable to the tax cut. The result was boosted by a budget deal at the beginning of this year that added billions to defense and domestic spending. But housing, which has struggled this year, shrank at a 1.1 percent annual rate after an even sharper 3.4 percent annual decline in the first quarter.

Today's Q2 GDP data showed that the economy expanded at a 4.1% rate.

The median projection of Fed policymakers for GDP, revised in June, sees the economy expanding 2.8 per cent this year, then easing to 2.4 per cent in 2019 and 2.0 per cent in 2020. With a healthy tailwind coloring expectations, the next round of numbers will be closely read for clues about how the year's second half will compare, starting with next week's main event for economic releases: payrolls for July (scheduled for Friday, August 3).

Outside of the GDP numbers, the economic schedule will also bring investors the final reading on consumer sentiment in July from the University of MI.

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