US Economy Grows at 4.1 Percent Annual Rate in 2nd Quarter

President Donald Trump speaks on trade at Granite City Works Steel Coil Warehouse Thursday

President Donald Trump speaks on trade at Granite City Works Steel Coil Warehouse Thursday

Import duties are seen undercutting economic growth, with higher prices for goods discouraging consumer spending and businesses shelving investment plans.

Joined by Vice President Mike Pence in a press conference at the White House, Mr Trump predicted "we're going to go a lot higher than these numbers" as he continues to renegotiate worldwide trade deals.

Consumers - buoyed by low unemployment, low borrowing costs and recent tax cut - ramped up their spending at a 4 per cent annual pace, contributing 2.69 percentage points to second-quarter growth in GDP (consumer spending accounts for about 70 per cent of the United States economy).

Trump, who has repeatedly attacked the economic record of his predecessor's administration, pledged during the 2016 campaign to double growth to 4 percent or better.

THE FACTS: Trump is correct that a lower trade deficit helped growth in the April-June quarter, but it's not necessarily for a positive reason.

Business spending on equipment slowed, rising at a 3.9 per cent rate in the second quarter.

On Friday, President Donald Trump touted what appeared, on its face, to be vast economic growth. The economy will be supported by a $1.5-trillion tax cut package in 2018 and increased government spending in the last quarter.

Diane Swonk, chief economist at Grant Thornton, said the growth rate was likely to meet the White House's three per cent target for the year and noted that a sudden drop in business inventories in the second quarter could point to a rebuild in the latter half of 2018.

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"We're on track to hit the highest average annual growth rate in over 13 years", Mr. Trump said at the White House.

But Trump did not urge caution on that front, instead pointing to a decrease in the USA trade deficit driven by those exports, calling it "one of the biggest wins" in the economic report. But in 2020 - a presidential election year - Mr Zandi said he is forecasting economic growth of just 0.9%, a pace that is so slow that it will raise the threat of a recession.

Exports surged 9.3 per cent, contributing a full point to growth in the quarter, with part of this strength reflecting a temporary spike in soybean and corn shipments as buyers and sellers sought to conclude transactions before the new tariffs took effect.

Economists surveyed by The Wall Street Journal expected a 4.4 per cent growth rate.

"Moments ago, the numbers for America's economic growth - or GDP - were just released". In 2019, he expects solid 2.6 percent growth.

While Friday's report showed the USA economy accelerating, the gains were in line with analyst forecasts - and were not out of proportion with some quarters in previous years.

Pay was growing even faster in the late 1960s, when the jobless rate remained below 4 per cent for almost four years.

It also showed that inflation, which has been lacklustre in recent years, rose by 2% according to the Fed's preferred measure, which is tied to consumer spending, except on food and energy.

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