Trump claims win as US growth hits 4.1%, fastest since 2014
WASHINGTON: The US economy accelerated to a 4.1% pace of growth in the second quarter, the fastest since 2014, letting President Donald Trump claim a win for his policies even though expansion is projected to cool.
The annualized rate of gains in gross domestic product (GDP) was just shy of the 4.2% median forecast in a
Bloomberg survey. It followed first-quarter growth of 2.2% that was revised from 2%, the commerce department reported on Friday. Consumer spending grew 4%, more than estimated, while non-residential business investment climbed at a 7.3% clip.
Trump seized the chance to declare his policies, including the biggest tax overhaul since the Reagan era, a success, calling the data “amazing” and “very sustainable.” The likelihood is nevertheless that the pace of expansion will slow as the effects of tax cuts fades, companies pull back in the face of foreign tariffs or strong dollar and the Federal Reserve raises interest rates further.
“The economy is doing quite well,” said Michael Feroli, chief US economist at JPMorgan Chase & Co. “It’ll be hard to repeat this performance on a sustained basis.”
Illustrating the volatility of some elements of GDP, net exports contributed 1.06 percentage point to the pace of growth, the most since 2013, partly on a surge in soybean shipments ahead of retaliatory tariffs. Inventories subtracted 1 point, the most since 2014, commerce said, citing soybean stocks as well as those of drugs and sundries and petroleum and related products.
Fed policy makers are expected to continue their gradual pace of interest-rate hikes aimed at keeping the economy from overheating, without moving so fast that they could choke off growth. The dollar and yields on 10-year treasuries declined after the report, which also showed inflation excluding food and energy was lower than estimated.
Trump, speaking on Friday at the White House, celebrated the report and said the economy is on track to reach an annual growth rate of more than 3%. “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,” the president said.