U.S. Economy Grew at 4.1% Rate in Second Quarter
S E E D E D C O N T E N T
Consumer spending, exports and business investment power strongest growth pace in nearly four years
WASHINGTON—The U.S. economy grew at the strongest pace in nearly four years during the second quarter, powered by a rebound in consumer spending, exports and firm business investment.
Gross domestic product—the value of all goods and services produced across the economy— rose at a seasonally and inflation-adjusted annual rate of 4.1% from April through June, the Commerce Department said Friday. That was a pickup from the first quarter’s revised growth rate of 2.2%.
Economists surveyed by The Wall Street Journal expected a 4.4% growth rate. The second-quarter growth reading was the strongest since the 4.9% annual rate reported for the third quarter of 2014.
Compared with the second quarter a year ago, output grew 2.8%.
The robust report makes it highly likely the Federal Reserve will continue gradually raising short-term interest rates to prevent the economy from overheating. Central bank officials have raised rates twice this year, and penciled in two further increases this year and three in 2019.
The Fed is widely expected to leave its benchmark rate unchanged at its policy meeting next week and then increase it in September by a quarter-percentage-point to a range between 2% and 2.25%.
Trade played a large role in the second quarter’s bumper growth. Net exports added 1.06 percentage point to the quarter’s 4.1% GDP growth rate, as exports rose strongly.
Earlier this month, the Commerce Department said U.S. soybean exports surged in the second quarter, delivering an outsize boon to economic growth even as China shifted much of its sourcing to Brazil in response to its worsening trade relations with the U.S. The export rally likely reflected efforts by buyers to get their soybeans before China’s 25% retaliatory tariffs on U.S. soybeans, which hit in July.
Inventories subtracted 1.00 percentage point from the quarter’s GDP growth rate. Both trade and inventories tend to be volatile categories.
Strong consumer spending helped boost growth alongside trade. A low unemployment rate, steady job and wage growth and the late-2017 tax overhaul may have encouraged spending by consumers and businesses in the second quarter. Consumer spending, business investment and government spending all rose.
Consumer spending accounts for more than two-thirds of total economic output. Friday’s report said personal-consumption expenditures rose at a 4.0% annual rate in the second quarter, the strongest rate of growth since the fourth quarter of 2014. Spending on durable goods alone contributed 0.64 percentage point to the second-quarter rate, the Commerce Department said. As Americans spent more, they saved less. The personal saving rate was 6.8% in the second quarter, down from 7.2% in the first.
A key measure of business spending moderated from the first quarter but remained strong. Nonresidential fixed investment—reflecting spending on commercial construction, equipment and intellectual property products like software—rose at a 7.3% rate after rising 11.5% in the first quarter.
Final sales, which measure the strength of demand for U.S. goods and services by excluding unsold goods that end up adding to business inventories, rose a strong 5.1% in the second quarter, compared with 1.9% in the first.
The housing sector, however, was lackluster for the second quarter in a row. Residential fixed investment fell at a 1.1% rate in the second quarter. That could reflect higher mortgage rates, low housing inventory and tax-code changes that diminished decades-old perks that encouraged homeownership.
Government expenditures were up at a 2.1% annual rate in the second quarter.
The $1.5 trillion tax cut passed by Congress late last year was part of President Donald Trump’s plan to boost economic growth to the above-3% annual growth rate that marked the robust expansions of the 20th century. Economic forecasters largely agreed the legislation would boost growth in the near term, but were split over whether the legislation would sustainably increase the economy’s growth rate in the face of demographic and other structural headwinds.
The current expansion, which began in mid-2009, became the second longest on record in July, trailing only the 10-year expansion that ended in early 2001.
MORE ON THE ECONOM
Growth has been lackluster during the current expansion: from the second quarter of 2009 to the end of last year, GDP increased at an average annual rate of 2.2%, below the 2.9% rate during the 2001-2007 expansion and the 3.6% rate from early 1991-2001.
Friday’s report was accompanied by revisions to economic-output statistics going back to 1929, including new methodology the Commerce Department said would address seasonal adjustment problems that have tended to leave the first quarter looking weaker than other quarters. Other revisions include incorporating newly available and more comprehensive data sources.
Tags
Some of this growth is attributed to increased spending as consumers shopped in advance of expected higher prices due to tariffs.
For the same reason, exports increased. Those companies wanted to beat the coming effects of a trade war.
But congratulations to Trump.
I wonder if he will get around to helping raise workers wages before he is sent packing after Mueller is finished with him.
U.S. economic growth jumped in the second quarter, a boost for President Trump and Republicans as they seek to make a strong economy a key part of their campaign message to voters heading into November’s mid-term election. But economists cautioned the higher growth is likely a blip..
Most independent economists say this quarter’s growth was juiced by stimulus from the trillion-dollar tax cut and a one-time rush by foreign companies to stock up on U.S. goods before Trump’s trade war escalated and tariffs kicked in on many products.
But the widespread expectation is that growth will be significantly lower in the third and fourth quarters, likely falling short of Trump’s 3 percent goal for the year.
“The bottom line takeaway is that this growth is not sustainable and it will slow in the second half of the year,” said Lakshman Achuthan, co-founder of the Economic Cycle Research Institute. “President Trump should celebrate this number because it is going to ease from here.”
.
While many economists warn that Trump’s trade war will hurt U.S. growth, they say it temporarily boosted growth in the spring as foreign firms rushed to make purchases before the tariffs took effect. Exports added more than a percentage point to growth, something that hasn’t happened in years and is unlikely to repeat .
Soybean exports exploded in the second quarter, as customers in several countries scrambled to snatch up supplies before new foreign taxes on U.S. soybeans went into effect, part of a broad retaliation against Trump’s tariffs on a range of foreign products.
.
The Federal Reserve predicts annual growth will be 2.8 percent this year and then fall back to 2.4 percent in 2019 and 2 percent in 2020 as the stimulus from the tax cuts and added government spending fade.
A bump in federal government spending also added to the pick-up in growth this spring as Congress approved additional money for the military and domestic programs.
.
But many economists expect economic growth to slow.
“Growth is likely peaking,” said Bricklin Dwyer, senior U.S. economist at BNP Paribas. “In our forecasts the second quarter marks a high watermark for growth.”
Link
Ivanka Trump wears a $2,300 dress to join her father at a steel factory
that dress cost 2300 dollars? I could make that dress for less than 30
that dress cost 2300 dollars? I could make that dress for less than 30
Same here, and under two hours.
Looks better on the model. Saggy boobs are not that attractive.
Unfortunately, the hatred continues, on an off topic comment by JR.....suprising....no one.
I think there might be a problem with the site. Comment windows in some of the Groups are not loading properly either since this morning. I have asked TiG about it in case they are working on the site in the background that might cause things to slow up or fuss up a bit.
pretty hard to argue with policies that work,
Can you name some that Trump has put in place that actually have worked for the American people and out allies and not just for his Good 'ol Boys and Putin?
Cutting taxes and regulations is always good for America
negotiating trade agreements is good for America.
our exports of coal, natural gas and oil are good for America
restoring relationships in the Middle East and Asia is good for America
Yeah....all good stuff. However, all that good stuff was negated when Trump imposed all those tariffs on our allies that are negatively affecting American companies, and the American people as well in the short run, much less the long run.
Yeah....great stuff there. As long as he and his kids get their pockets full, and Putin is pleased, he don't give a ratz azz about anyone else, certainly not the American people who will pay a high price for is arrogant and selfish acts.
But, I realize here is your hero and you don't like hearing anything negative about him, but, until he stops acting like inane mental case, it will be hard for the majority of the American people to take his side. Even people in his own party are not happy with him at this point. Although, I know you and other Trump lovers don't are about anyone one else thinks that don't agree 100% with what you think.
However, no matter how much you and others love Trump, History will not treat him kindly.
The main reason the economy grew 4.1% is because countries are buying up as much soy beans as they can before the tariffs take effect.
Wrong.
Where did you get this talking point?
Obviously you know nothing about the soybean market, The Chinese quit buying U.S. soybeans months ago.
What other "countries" have put tariffs on soybeans besides China?
What other "countries" have put tariffs on soybeans besides China?
We now have to come up with 12 BILLION dollars to prop up the soy bean farmers. Why? Because China refuses to buy our soy beans. Why? Tariffs. And where is this 12 BILLION dollars coming from? China, of course.
Moral of the story? China MADE 12 BILLION dollars and the best part for them? They didn't have to buy ONE FUCKING SOY BEAN.
We now have to come up with 12 BILLION dollars
That is a drop in the bucket to keep you fed.
I'm thinking President Trumps wild ass tariffs might work out.
That is going to mess with a lot of never Trumpers plans,
Just goes to show, like tenured professors, it's hard to get rid of them as it is with bad economists.
The Fed pumped trillions of dollars into the economy with Quantitative Easing, two stimulus packages and without all that money pumped into the economy, Trump would have inherited a 9 year old recession. Wasn't it Paul Krugman who said Trump would get us in a global recession that would never end? Without QE and stimulus packages and continuing Obama's economic policies he could have made that statement back in 2009 and it would have been more appropriate. Fortunately this country was saved from a certain disaster. Trump may be a liar, but the numbers don't lie, even though the MSM does.
It took Obama from the end of the last quarter of 2014 plus all of 2015 and all of 2016 to increase the Real Domestic Product Quantity Index as much as it has taken Trump to do it during 2017 plus 2 quarters into 2018.
It took Obama from the end of the third quarter of 2014, all of 2015 and all of 2016 to increase the Gross Private Domestic Investment as much as it took Trump to do the same thing from all of 2017 until the end of the second quarter of 2018.
Throughout Obama's years in office the fear of another recession was always a concern, but when it became evident it could be a reality, QE always came in to give the economy a kick to give the economy a boost. The biggest one was all of 2013 through October 2014 which is one of the reasons the GDP in 201
The Dow was 25,451 on July 27,2018 and it was 18,589 on November 9, 2016, the day Trump was elected.
That's an increase of 6,862 since Trump was elected. It took the last two months of 2011, all of 2012, all of 2013, all of 2014, all of 2015 and all of 2016 for the Dow to go up as much as it has gone up with Trump in the last 19 months or one year and 7 months.
The Dow high before the recession was October 9, 2007 at 14,164 and the low for the Dow as it was ending was March 9, 2009 at 6,547. it took all of the remainder of 2009, all of 2010, all of 2011, all of 2012 until March 4, 2013 before it reached the level of 14,127 it was before the recession started.
I think the recession was declared over by May of 2009 and it took 4 years for the Dow to go back up to the pre-recession numbers of 14,127 and once it reached that level on March 4, 2013 it increased to 18,589 by the day Trump was elected which is an increase of 4,462 which is 2,400 less than it has gone up during the last 19 months. So it went up 2,400 points less in 44 months than what it has gone up under Trump in 19 months.
I go by numbers and the fact Obama survived off Quantitative Easing, Stimulus Packages and just being a good con artist fooling the low information people for 8 years.
Every time the economy looked like a recession was just around the corner with Obama, Quantitative Easing was used to avert it.
Trump did have one such quantitative easing, but it was QE of the public's tax burden and yes the rich and famous who pay all the public's salaries as well reaped the benefits. Instead of increasing the public debt the money was put back into the public's hands by those who owned the businesses including big corporations increasing the tax revenue to the government. Nearly half the people in this country don't pay any Federal taxes and many receive more money back after paying taxes on the job than they actually paid in, so no matter what you do other than increase the welfare expenditures will not affect them one way or the other, except it may have given some of them, those who wanted to participate in the renewed economy, a chance to participate in it.
Who is online
100 visitors