Tuesday, 21 August, 2018

US Q2 GDP growth hits 4.1%, best pace in 4 years

Soybeans are unloaded at dusk during harvest in Buda Illinois on Sept. 29 2017. Bloomberg Soybeans are unloaded at dusk during harvest in Buda Illinois on Sept. 29 2017. Bloomberg
Gerardo Duncan | 30 July, 2018, 23:04

It followed first-quarter growth of 2.2 percent that was revised from 2 percent, the Commerce Department reported Friday.

Personal consumption expenditures increased 4 percent while business investment jumped 7.3 percent, and government spending was up by 3.5 percent.

Trump seized the chance to declare his policies, including the biggest tax overhaul since the Reagan era, a success, calling the data "amazing" and "very sustainable". Many analysts believe growth will weaken as the effects fade from the tax cuts and a government spending increase.

House Ways and Means Committee Chairman Kevin Brady, Texas Republican, said "our economy is booming", and he credited "a competitive tax code, bold reforms to regulations, and encouraging news this week on trade". "It'll be hard to repeat this performance on a sustained basis". The import duties are seen undercutting economic growth, with higher prices for goods discouraging consumer spending and businesses shelving investment plans.

And Fuest says New Yorkers are already feeling the impact.

This marks the fastest pace of growth for the US economy in any quarter since the third quarter of 2014. He also touted the unemployment rate among African American unemployment, saying the country has "achieved the lowest level in history".

Flanked by his top economic advisers, Trump delivered remarks on the South Lawn of the White House on Friday to celebrate a report that the economy expanded in the second quarter at the fastest pace in four years.

Post — The Washington Post
Post — The Washington Post

White House economic adviser Larry Kudlow said Friday's GDP release will reflect "big" growth for the USA economy.

TRUMP, on GDP figures: "On Friday, numbers come out and I don't know what they are, but there are predictions from 3.8 to 5.3".

The US is now a $20 trillion-plus economy, the first time a country has hit that milestone. While polls and historical trends suggest Democrats are primed for significant gains in November's midterm elections, voters give Trump high marks for the economy. That means for the entire year, growth will be about 3%, not much better than we have seen in the past few years.

The Fed last month estimated that the USA economy would grow at 2.8 percent this year, still below the Trump administration's target of over 3 percent of annual growth rate. Economists in a Reuters poll earlier this week predicted that growth will slow notably from here. When you get a 4%, above 4% pace, it's pretty fantastic and for the first time ever in the history of the country we have more jobs available than we have people. Net exports added 1.06 percentage point to the quarter's 4.1 per cent GDP growth rate, as exports rose strongly.

Households bought motor vehicles and spent more on health care, utilities, food and accommodation in the last quarter. Now, the growth rate is around seven percent. His two-term average of 1.6 percent annual growth is the worst among post-World War II presidents. The drag on overall growth, though, was negligible.

Compared to the second quarter of 2017, the economy grew 2.8 per cent. Soybeans exports, for example, surged 9,400 percent in the period from March to May over the prior year, Morgan Stanley said. "Producers may have front-loaded some goods for exports ahead of the tariffs", JPMorgan's Feroli said. There was also that rise in consumer spending, presumably attributable to the tax cut. The result was boosted by a budget deal at the start of the year that added billions to defense and domestic spending. The prospect of another 4 per cent-plus rate anytime soon seems remote. When services are included, such as insurance, tourism, and engineering, the US had a $2.8 billion surplus with Canada a year ago.

But many economists expect economic growth to slow.

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