U.S. Economic Growth Accelerated Sharply In The Second Quarter

Workers at the Hollywood Bed Frame Company attend an event to mark the company's upcoming expansion which will double the manufacturer's workforce adding 100 new local jobs at the company's factory in Commerce California seven miles (11

In remarks to reporters at the White House, Mr Trump said growth will expand even faster as he secures new trade deals. With the second quarter number of 4.1%, I continue to forecast 4% growth for the entire year is possible.

With the size of the American economy now surpassing US$20 trillion, GDP expanded by 4.1 per cent in the April-June quarter, making the United States the fastest-growing of advanced countries, according to a government report.

However, private forecasters cautioned that the April-June pace is unsustainable because it stems from temporary factors. The rest of the year is likely to see good, but with slower growth of around 3%. And, ironically, Trump's various protectionist measures spurred a boom for US exporters - because foreign buyers were eager to stock up on American goods before their governments slapped retaliatory tariffs on such products.

The tax cuts, they say, will have done little to stimulate economic growth.

Diane Swonk, chief economist at Grant Thornton, said the growth rate was likely to meet the White House's three per cent target for the year and noted that a sudden drop in business inventories in the second quarter could point to a rebuild in the latter half of 2018.

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. Businesses added 2.3 million jobs in 2016, before Trump took office, more than the 2.2 million gained in 2017.

As expected, the consumer drove the economy in the second quarter, but at a much higher pace than expected, with consumption at 4 percent. His plan is to boost growth to the above-3 per cent annual rate on a sustainable basis, exceeding the average 2.2 per cent pace during this expansion.

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"Real consumer spending rebounded, as expected, at a 4.0 percent pace, with gains in durable and nondurable goods as well as services".

Another factor that bolstered the second quarter was a rush by exporters of soybeans and other products to get their shipments to other countries before retaliatory tariffs in response to Trump's get-tough trade policies took effect. Both he and Shepherdson had predicted very strong second-quarter GDP growth of 4.5 percent or higher.

Pay was growing even faster in the late 1960s, when the jobless rate remained below 4 per cent for almost four years. Federal-funds futures were pricing in a 93% probability for another 25-basis-point increase in the central bank's target rate (currently 1.75%-2%) at its September 25-26 meeting, unchanged from Thursday, according to Bloomberg.

After next year, many economists expect growth rates to subside again, as the boost from tax cuts and federal spending dissipates.

GDP numbers are out this morning.

First-quarter gross domestic income, adjusted for inflation, was revised to a 3.9 percent gain from a previously reported 3.6 percent. Growth has averaged just 2.2 percent since mid-2009 through the end of a year ago, the same as previously reported.

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