US econ­omy grew at mod­est 2% rate in 2nd quar­ter

The Morning Call - - NATION & WORLD - By Martin Crutsinger

WASH­ING­TON — The U.S. econ­omy grew at a mod­est 2% an­nual rate in the sec­ond quar­ter, a pace sharply lower than the 3%-plus growth rates seen over the past year. Many an­a­lysts be­lieve growth will slow fur­ther in com­ing quar­ters as global weak­ness and ris­ing trade tensions ex­ert a toll.

The April-June in­crease in the gross do­mes­tic prod­uct, the econ­omy’s to­tal out­put of goods and ser­vices, slipped from a brisk 3.1% gain in the first quar­ter, the Com­merce Depart­ment re­ported Thurs­day.

The gov­ern­ment’s third and fi­nal look at sec­ond-quar­ter GDP growth was the same as the pre­vi­ous es­ti­mate, although the com­po­nents were slightly al­tered. Con­sumer spend­ing and busi­ness in­vest­ment rose at slower rates than pre­vi­ously es­ti­mated, but this was off­set by slightly stronger gains in gov­ern­ment spend­ing and ex­ports.

In the cur­rent quar­ter, an­a­lysts be­lieve GDP is likely grow­ing at the same mod­est 2% rate, and they are fore­cast­ing a sim­i­lar out­come in the fi­nal quar­ter.

For the year, GDP is ex­pected to rise around 2.2%, down from the strong 2.9% gain seen last year, which had been the best per­for­mance since 2015.

Pres­i­dent Don­ald Trump, who is count­ing on a strong econ­omy to boost his re­elec­tion bid, has called the econ­omy’s per­for­mance the best ever. But af­ter a spurt in growth last year due to the pres­i­dent’s $1.5 tril­lion tax cut pro­gram, growth has slowed no­tice­ably to slightly be­low the 2.2% an­nual growth rates turned in dur­ing the cur­rent eco­nomic ex­pan­sion.

While the eco­nomic re­cov­ery from the Great Re­ces­sion is now in its 11th year, the long­est in U.S. his­tory, it has been the slow­est in terms of an­nual growth rates, a fact econ­o­mists at­tribute to slower growth in the la­bor mar­ket, due to the re­tire­ment of baby boomers, and a slow­down in pro­duc­tiv­ity.

Trump, how­ever, re­peat­edly at­tacked Obama ad­min­is­tra­tion eco­nomic poli­cies for the lack­lus­ter GDP rates and pledged to achieve an­nual growth above 3% with his eco­nomic pro­gram of big tax cuts, dereg­u­la­tion and tougher en­force­ment of trade laws.

The econ­omy has achieved four quar­ters of 3%-plus GDP rates since Trump took of­fice in early 2017, but econ­o­mists doubt that this pace can be achieved on a sus­tained ba­sis given the la­bor force and pro­duc­tiv­ity is­sues fac­ing the coun­try.

This year’s ex­pected slow­down has been at­trib­uted to a fad­ing of the ef­fect of the Trump tax cuts as well as ad­verse ef­fects of Trump’s trade war with China.

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