Published: Mon, July 30, 2018
Worldwide | By Lisa Hogan

The President Says 4.1% GDP GROWTH is JUST THE BEGINNING

The President Says 4.1% GDP GROWTH is JUST THE BEGINNING

Soybean exports - a target of retaliatory tariffs from China and the European Union - shot up, likely in an effort to skirt the incoming tariffs.

MARTIN: Ayesha, this is a repeated refrain from President Trump.

Personal consumption was strong in the second quarter, probably aided by the reduction in taxes for many Americans and the increase in optimism about the economy, especially among Republicans.

The growth, at 4.1 percent, was the best quarter since 2014.

"I will say this right now". The GDP broadly reflects the goods and services produced in the country.

Canada, Mexico and other countries have announced retaliatory tariffs against USA products in response to the US tariffs on steel and aluminum imports. Between the start of April and the end of June, America's GDP grew at a 4.1 percent annual rate; during his failed presidential bid, Jeb Bush promised to deliver a mere 4.o. He also touted the unemployment rate among African American unemployment, saying the country has "achieved the lowest level in history". So there was just a lot going on in this report that led to these big numbers, but that all economists that I talked to say, look; no, this is not going to continue at 4 percent, maybe 2 1/2 next quarter. The economy will be supported by a $1.5-trillion tax cut package in 2018 and increased government spending in the last quarter.

President Donald Trump falsely claimed Friday he's pulled off "an economic turnaround of historic proportions". That was the fastest in 3-1/2 years and followed the January-March period's stall-speed pace of 0.5 percent.

Also nudging GDP growth upward were stimulus effects from the tax cuts that went into effect at the beginning of the year and a big increase in government spending.

The United States just had its strongest quarter of economic growth since 2014.

The President also pointed out a decrease in trade deficit with a number of countries and vowed economic growth for the USA will continue as a number of agreements are renegotiated. Now, however, the passage of tax cuts and the impacts of deregulation are likely to keep economic growth accelerating in the quarters ahead.

January-March quarter GDP growth was revised up to a 2.2 percent pace from the previously reported 2.0 percent rate to account for updated information and methodology improvements.

Another quarter of solid business spending on equipment is expected, though the pace has slowed from the double-digit growth experienced in the second half of 2017.

A 5% growth rate for the remainder of the year may be hard to achieve.

There were some signs of softness, however. Residential fixed investment fell 1.1 per cent.

That weakness is a potential red flag, said Lindsey Piegza, chief economist at Stifel.

The front-loading of soybean exports, however, depleted farm inventories. Many think annual growth in the second half of this year will be 2.5 percent to 3 percent. Growth will slow, but we may not have a recession. We have to give the president credit here.

Another factor at play here is tax cuts. Perversely, so did the threat of various trade rows.

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