Trump Celebrates GDP Surge: America is Winning Again

Marcus Newton
July 29, 2018

They contributed to the robust GDP growth that the president touted - "We've accomplished an economic turnaround of historic proportions", he said.

The U.S. economy had a blockbuster second quarter, with growth surging to a 4.1 percent pace, the Commerce Department said Friday.

But most economists and financial analysts disagree.

It remains possible then, that reality will prove Trump's ebullient optimism about the future of American economic growth right. Mr. Trump has embraced a discredited industrial policy, promoting old-economy industries such as steel and coal, at the expense of the hard but necessary transition to cleaner growth.

"The economy is now firing on all cylinders, and that growth is likely peaking", Bricklin Dwyer, senior US economist at BNP Paribas, said in a research note. The data show the falling unemployment rate and gains in home values reflect the duration of the recovery, rather than any major changes made since 2017 by the Trump administration.

Friday's report showed the economy boomed in the second quarter of 2018, although many economists and policymakers believe the pace is unlikely to be sustained in the long run, given the ageing of the population and slow productivity growth of recent years. Of course, GDP figures can be subject to big fluctuations from one quarter to another.

"By increasing growth to 3 percent over the next 10 years, that would mean 12 million new American jobs and $10 trillion of new American wealth at least", he continued, adding that the numbers are sustainable.

Similarly, Congress's budget deal increased federal outlays by 3.5 percent in the second quarter, which also provided a short-term boost to GDP.

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The average annual growth rate has been 2.8% over the past four quarters and is now on track for 3.1% growth in 2018 - a level that has been met with criticism by some economists.

Private forecasters cautioned that the April-June pace may be unsustainable because it stems from temporary factors.

President Donald Trump said he was thrilled with what he called an "amazing" growth rate - the strongest quarterly figure since 2014 - and said it wasn't "a one-time shot".

It may also be his best chance to argue that a huge and controversial tax cut, the only really significant legislation he has managed to pass, is - as he said it would - unleashing prosperity...

The U.S. economy grew at its fastest pace in almost four years in the second quarter as consumers boosted spending and farmers rushed shipments of soybeans to China to beat retaliatory trade tariffs before they took effect in early July.

THE FACTS: Even allowing for Trump's tendency to exaggerate, this overstates things. But many think the annual 4.1 percent growth rate last quarter is likely the high point for any one quarter. Growth was in line with economists' forecasts and significantly higher than the revised 2.2 per cent reported in the first three months of the year. If you slash taxes and crank up spending, you are going to get a response.

Each country has a few products that are still largely protected, such as dairy in Canada and sugar in the United States.

It was a good week for the economy, which is why our weekly Trump-o-meter reads BIGLY, our second highest score.

Other reports by MaliBehiribAe

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