Trump Celebrates GDP Surge: America is Winning Again


U.S. economy surged to an annual growth rate of 4.1 per cent - the fastest pace since 2014 - in the April-June quarter.

White House economic adviser Larry Kudlow said Friday's GDP release will reflect "big" growth for the U.S. economy. Now, however, the passage of tax cuts and the impacts of deregulation are likely to keep economic growth accelerating in the quarters ahead.

This is the first time since the 2016 election that U.S. growth has hit the 4% target President Trump set himself during the campaign.

However, private forecasters cautioned that the April-June pace is unsustainable because it stems from temporary factors. The economic bump, at 4.1 percent, was the best quarter the country has seen since 2014, according to the Commerce Department.

Although many economists warn that Trump's trade war will hurt USA growth, they say it temporarily boosted growth in the spring as foreign firms rushed to make purchases before the tariffs took effect.

Unlike in 2015, growth has accelerated this year, in part, because of the stimulus from Trump's deficit-funded tax cuts.

The average annual growth rate has been 2.8% over the past four quarters and is now on track for 3.1% growth in 2018 - a level that has been met with criticism by some economists.

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".

President Trump has been steadfastly claiming that his policies will catapult the US economy into a much higher rate of growth - 4 percent over the next few years.

Weather: Wednesday to see few morning showers
UPDATE: Severe thunderstorms will be possible across the Tennessee Valley from late this evening through the overnight. Temperatures reach the lower to middle 80s on both days and the mugginess continues.

On the two previous times that growth exceeded 4%, the economy grew at half that rate for the remainder of the year and finished the year just above 2% annual growth.

And Trump says as new trade deals com in, he expects the growth to soar even higher.

A rebound in consumer spending from the first quarter was the biggest contribution to growth.

Another key factor that bolstered growth was a rush by exporters of soybeans and other products to move their shipments to other countries before retaliatory tariffs in response to Trump's tariffs on imports took effect. Both he and Shepherdson had predicted very strong second-quarter GDP growth of 4.5 percent or higher. This would mark the fastest year-on-year growth rate since 2015.

Mr Zandi forecast that growth for 2018 will hit 3%, the best annual growth rate in over a decade. The economy expanded 2.9 per cent in 2015, though it slowed the following year.

Fund also observes that real disposable income went up by 3 percent this year following last year's gain of 2.3 percent.

Outside of the GDP numbers, the economic schedule will also bring investors the final reading on consumer sentiment in July from the University of MI.

Meanwhile core PCE prices, a measure of inflation, grew 2% quarter-on-quarter, less than expected and a slight deceleration from the 2.2% pace of price growth seen to start the year.