USA economy surges to 4.1 percent growth in 2nd quarter

US economy surges in second quarter grows at 4.1 percent rate

US economy surges in second quarter grows at 4.1 percent rate

Growth in consumer spending, which accounts for more than two-thirds of USA economic activity, is forecast accelerating from the first quarter's lethargic 0.9 percent rate, which was the slowest in almost five years.

Still, Mr Lynch said he sees the pace of USA growth easing to an annualised rate of 2.9 per cent through the second half of 2018, from 3.1 per cent in the six months through June. "As the trade deals come in one by one, we're going to go a lot higher than these numbers, and these are great numbers. It's going to get better, it's totally sustainable, I look forward to next quarter", said the President.

THE FACTS: Trump is correct that a lower trade deficit helped growth in the April-June quarter, but it's not necessarily for a positive reason.

For the year, the economy is likely to expand at a 3 per cent pace or more for the first time since 2005. Now, however, the passage of tax cuts and the impacts of deregulation are likely to keep economic growth accelerating in the quarters ahead. And economic growth topped 4 per cent for three full years from 1998 through 2000, an annual rate it hasn't touched since. That was a pickup from the first quarter's revised growth rate of 2.2 per cent, the New York Times reported. Consumers began spending their increased take-home pay on autos and other big-ticket items, spurred by the $1.5 trillion tax cut Trump pushed through Congress in December.

Private forecasters cautioned that the April-June pace is unsustainable because, they say, it stems from temporary factors, including a rush by exporters of soybeans and other products to get their shipments out before retaliatory tariffs took effect.

If the economy grows at 3% or more in 2018, it will be the highest annual rate since 2005.

Trump boasted the biggest takeaway is that the US deficit dropped by more than $50 billion. But that's illusory. Exports surged in the second quarter as soybean producers and others anxious about trade wars raced to get goods out of the country before tariffs were likely to go into effect.

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 per cent and 2.25 per cent.

"Nevertheless, even without that distortion, which will be reversed in the third quarter, exports would have increased by 5.3%".

Mr Zandi forecast that growth for 2018 will hit 3%, the best annual growth rate in over a decade. "Growth could go back to about a 2% to 2.5% level".

Spending Power The data showed consumers' wallets grew at a slower pace.

He said the GDP numbers also underscored the urgent need for the job-training programs that the administration is pushing.

A weaker housing market may also be a factor that weighs on economic activity in this year's second half, as outlined earlier today.

Market pros are also sifting through the government's revisions to the data, which resulted in changes in the last two first quarters and other adjustments. Annual growth has averaged just 2.2 percent since mid-2009 through the end of past year, the same as previously reported.

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