Trump claims US is economic envy of the entire world

30 July, 2018, 23:01 | Author: Angel Logan
  • Trump Breaks Tradition on GDP Figures

A large, temporary surge in agricultural exports, specifically soybeans, should also juice growth in the second quarter.

"We've accomplished an economic turnaround of historic proportions", Trump said.

President Donald Trump said he was thrilled with what he called an "amazing" growth rate - the strongest quarterly figure since 2014 - and said it wasn't "a one-time shot".

Friday's report revised the estimate for GDP growth in the first quarter to 2.2%, up from 2%. The recent stretch of subpar growth - just over 2 percent annually - is unprecedented. He said the economy is on track to reach an annual growth rate of more than 3 percent.

"Real GDP 4.1 percent in the second quarter after 2.2 percent in the first quarter".

All signs point to a continued strong economy with economic growth reaching levels where Americans will feel true prosperity again. Notably, consumer spending perked up quite a bit, rising at an annualized 4.1% rate in Q2 - the fastest since 2014 - and almost double the gain in the previous quarter. Ahead of the release, President Donald Trump and members of his economic team had been promoting the notion that second-quarter growth would be robust. The soybean boost is likely to reverse in the coming quarters and the fiscal stimulus is seen fading in 2019.

So much for the boom from the cut in corporate taxes.

Fresh off a preliminary agreement with the European Union to hold off on additional tariffs and begin negotiations toward reducing trade barriers, Trump also claimed that he has "ended" foreign trade abuses by other countries, even as trade feuds continue on several fronts.

Otherwise, the growth will temper off. Trump has kept his promise for one quarter - but he may not be able to keep it for a whole year. The US central bank increased borrowing costs in June for the second time this year and forecast two more rate hikes for 2018. Consumer spending grew 4 percent, more than estimated, while nonresidential business investment climbed at a 7.3 percent clip.

The value of the dollar immediately rose and Treasury yields jumped in response. The total value of all US stocks is now equal to 154 percent of the annualized GDP. But that's illusory. Exports surged in the second quarter as soybean producers and others anxious about trade wars raced to get goods out of the country before tariffs were likely to go into effect.

It remains possible then, that reality will prove Trump's ebullient optimism about the future of American economic growth right.

Many economists forecast growth will drop back to roughly 2.5 per cent to 3 per cent in the third quarter.

FILE PHOTO - A shopper walks down an aisle in a newly opened Walmart Neighborhood Market in Chicago in this September 21, 2011 file photo. Historically, the United States has grown over 3 percent a year. Purchases of new autos were a major factor, along with spending on health care, housing and utilities and food services and accommodations. But this spring, business investment in equipment was sluggish, chugging along at its slowest pace since late 2016.

The second-quarter increase in GDP was in line with economists' expectations. They subtracted 1.0 percentage point from GDP growth.

"It's in anticipation of a trade war", MacGuineas said. Because of the North American Free Trade Agreement, Canada's market is nearly totally open to the United States.

Investment in homebuilding fell for a second straight quarter.

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