Trump claims victory as GDP grows at fastest pace since 2014

Ann Santiago
July 28, 2018

The U.S. economy accelerated last quarter at an annual rate of 4.1 percent, the government estimated Friday, as consumers spent tax-cut money, businesses stepped up investment and exporters rushed to ship their goods ahead of retaliatory tariffs.

In a big win for the Trump administration on Friday, the US economy advanced at its fastest pace since 2014.

"We've accomplished an economic turnaround of historic proportions", Trump told reporters during hastily arranged remarks on the South Lawn of the White House, where he was joined by Vice-President Mike Pence and flanked by members of his economic team. But many think the annual 4.1 percent growth rate last quarter is likely the high point for any one quarter.

The tax cuts benefit ties positively back to President Trump, but the tariffs loom over this economic growth.

However, she said the trends in the housing market, as well as the one-off boost in exports in the most recent quarter, call "into question the sustainability of above-trend topline growth looking out to the second half of the year". I happen to think we're going to do extraordinarily well in our next report...

Trade played a large role in the second quarter's bumper growth. Central bank officials had raised rates twice this year and pencilled in two further increases this year and three in 2019, Efe news reported.

Personal consumption expenditures increased 4 percent while business investment jumped 7.3 percent, and government spending was up by 3.5 percent. Net exports added 1.06 percentage point to the quarter's 4.1 per cent GDP growth rate, as exports rose strongly. While that was the strongest performance since the third quarter of 2014, it was not the best since the recession ended in mid-2009.

Council of Economic Advisers Chairman Kevin Hassett on the state of the US economy and the trade truce with Europe. Exports rose at a 9.3 percent rate in the second quarter, while imports grew at a tiny 0.5 percent rate. Average hourly pay, before adjusting for inflation, is rising at about a 2.5 percent annual rate, below the 4 percent level reached in the late 1990s when the unemployment rate was as low as it is now. Some economists think full-year growth in gross domestic product could hit 3 percent in 2018 for the first time in the almost decade-long recovery, a prospect that became more likely following Friday's strong numbers.

Compared with the second quarter of 2017, the economy grew by 2.8% in the April-June period. The result was boosted by a budget deal at the beginning of this year that added billions to defense and domestic spending.

But economists generally expect growth will slow in coming months. Just before Beijing's retaliatory tariffs against the US started at the beginning of July, US soybean exports to China skyrocketed.

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