US economy grew at 4.2% rate in Q2

THE UNITED States economy grew at a robust annual rate of 4.2 per cent in the second quarter, the best performance in nearly four years, though economists believe growth has slowed in the current quarter partly because of a drag from trade.

The performance of the gross domestic product, GDP, the country’s total output of goods and services, was unchanged from an estimate the Commerce Department made last month, the government reported Thursday.

A big part of that growth reflected a temporary rush to ship soybeans and other US exports out before penalty tariffs triggered by Trump’s gettough trade policies took effect.

Economists believe growth has slowed in the current quarter to between three per cent and 3.5 per cent, still a solid pace. While trade boosted GDP by 1.2 percentage point in the second quarter, due to a surge in exports, it is expected to trim growth by around one percentage point in the third quarter.

Still, economists believe the country is on track for annual growth this year of around three per cent. That would be the best performance since 2005, three years before the 2008 financial crisis pushed the country into the worst recession since the 1930s. The country is currently in the 10th year of an economic expansion, the secondlongest in history. But growth has averaged a lacklustre 2.2 per cent, making this the weakest recovery in the post-World War II period.

There is also an expectation that rising interest rates from the US Federal Reserve will temper growth.

The Fed pushed its key policy rate up for an eighth time on Wednesday to a new range of two per cent to 2.25 per cent.

As he has done recently, Donald Trump criticised that move, but Fed Chairman Jerome Powell told reporters at a news conference on Wednesday that outside criticism would have no impact on the Fed’s efforts to follow its mandate of promoting maximum employment and stable prices.

The Fed indicated that it planned to stick with its plan to raise rates one more time this year and another three times in 2019.

AP Trucks travel along a loading dock at the Long Beach Port in California on August 22. The US economy grew 4.2% in the June quarter, but trade tensions are seen as weighing on the current period.