The President Says 4.1% GDP GROWTH is JUST THE BEGINNING

by Ben Pena July 29, 2018, 2:58
The President Says 4.1% GDP GROWTH is JUST THE BEGINNING

"At least half the growth is coming from two trade-related issues - a soybean-led export burst and inventory accumulation".

The economy grew by more than 4 percent in the second quarter of 2018, however. Excluding food and energy, the central bank's preferred price index rose at a 2 percent annualized rate last quarter, following 2.2 percent in the first three months of the year.

Another factor at play here is tax cuts. However, the notion of a Q2 sugar high is not fully consistent with the data. Thus, households have not spent at an unsustainable pace so far this year. Excluding soybeans and corn, the export growth was steady at around 5% in the second half of 2016. The revisions showed that growth in 2017 came in at 2.2 percent, slightly below the 2.3 percent previously reported. While U.S. manufacturers face higher production costs, this is being offset by a lower federal corporate tax rate (down to 21 per cent from 35 per cent) and the ability to write off 100 per cent of new investments as soon as they are made, instead of having to amortize them over several years or decades. House Minority Whip Steny Hoyer (D-Md.) recently credited the former president for the improving economy while unveiling an update to his job growth platform Monday.

Spending Power The data showed consumers' wallets grew at a slower pace. He said the economy is on track to reach an annual growth rate of more than 3 percent. That followed a downwardly revised 0.5 percent pace of consumption growth in the prior three months.

Do you run a business that's hiring more people?

These movements were partly offset by a downturn in private inventory investment and a deceleration in nonresidential fixed investment.

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The U.S. economy had a blockbuster second quarter, with gross domestic product surging 4.1 percent, its fastest pace since 2014.

But most economists say such a strong growth rate is unlikely to last.

Finally, the trade deficit narrowed substantially in the spring. They also said they'd team up to combat trade abuses by an unnamed country that can only be China. He just says, well, I'm going to negotiate a better deal.

The gains were driven by strong consumer spending and a surge in exports as firms rushed to beat new trade tariffs.

I have penciled in a widening in the trade gap for the summer, but the volume of trade flows in future years could be sharply higher or lower, depending on the eventual result of the current trade negotiations.

The U.S. dollar is thus strengthening against other global currencies, threatening to widen the U.S. trade deficit that Mr. Trump insists he can eradicate with his protectionist policies. The personal savings rate also fell in the second quarter, hitting 6.8% against 7.2% in the first quarter of the year. While those effects will subside, economists have consistently expressed confidence that tax cuts and increased government spending will continue to drive growth in the short term.

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