GDP grew at 4.1% last quarter

29 July, 2018, 03:00 | Author: Darnell Patrick
  • Jason Furman and Barack Obama

When services are included, such as insurance, tourism, and engineering, the USA had a $2.8 billion surplus with Canada a year ago.

Most economists caution this is likely to be a one-off growth spurt and not a new sustained trend.

Trump, who has repeatedly attacked the Obama administration's economic record, had pledged during the 2016 presidential race to double annual economic growth to 4 percent or more.

"As the trade deals come in one-by-one, we're going to go a lot higher than these numbers, and these are great numbers", Trump said Friday at the White House.

The second quarter acceleration came in part after the injection of stimulus and Republican tax cuts.

Gross domestic product grew by 4.1 per cent annualised between April and June, the fastest pace since the third quarter of 2014. "It just has an impact in one quarter and will be reversed in the next".

In the second quarter, the USA recorded an 80% annualized jump in food, feed and beverage exports, mainly from soybeans and corn. At a rally at a steel plant in Illinois Thursday, Trump predicted that the numbers released by the Commerce Department Friday morning would be very good indeed, the Wall Street Journal reports.

"I'm left with a "meh" kind of mood as expectations were built up for this to be a strong number-including by administration officials", said Mazen Issa, a senior currency strategist at TD Securities. The Bureau of Economic Analysis incorporated new data sources, mainly tax return data from the IRS, that led them to make massive upward adjustments to personal income over the past several years. Less so now, when the economy is already at full employment and most tax cuts have gone to the wealthiest households, than during a downturn when any extra money in the pockets of individuals is immediately spent.

"The economy is now firing on all cylinders, and that growth is likely peaking", Bricklin Dwyer, senior USA economist at BNP Paribas, said in a research note. Economists also expect slower growth in 2019 and 2020.

I scan the headlines at CNN a few times every day, so I can tell you that it's pretty unusual to see a positive story about President Trump featured prominently on the site.

This all sounds like an economic train wreck waiting to happen.

But on CNN Maya MacGuineas, President of the Committee for a Responsible Federal Budget, pointed out that the economic bump is temporary-and fueled by President Donald Trump's trade war, which may cause long-term damage.

THE FACTS: Trump didn't inherit a fixer-upper economy. This has put Prime Minister Justin Trudeau and Finance Minister Bill Morneau in a political and economic bind.

Unemployment is lower than it has been for decades, corporate earnings are strong and it seems unlikely that a sudden crisis is looming that could derail things before Americans head to the polls in midterm elections that will have a huge bearing on Trump's presidency. And for now, at least, it should stand its ground.



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