The U.S experienced economic growth for 2018 with a brisk 4.1% rate last quarter, as consumers spent tax-cut money, businesses stepped up investment and exporters rushed to ship their goods ahead of retaliatory tariffs.
President Trump is thrilled with this amazing growth rate and said, “It wasn’t a one-time shot.”
Trump, who has been repeatedly attacked by the Obama administration’s economic record, pledged during the 2016 presidential race to double annual economic growth to 4% or more.
The President boasted last Friday, “We’ve accomplished an economic turnaround of historic proportions.”
He is predicting that growth for 2018, as a whole would be the best in 13 years.
Some experts are saying that the April-June is due to temporary factors but many analysts are forecasting growth for this year to reach 3%, which is the best since 2005.
“We believe quarter two will represent a growth peak as the boost from tax cuts fades, global growth moderates, inflation rises, the Fed tightens monetary policy and trade protectionism looms over the economy,” said Gregory Daco, chief U.S. economist at Oxford Economics on economic growth for 2018.
Consumer spending accounts for about 70% of economic activity, consumers began spending their higher take-home pay on autos and other big-ticket items, spurred by the $1.5 trillion tax cut Trump pushed through Congress in December.
Another reason for the growth was the rush by exporters of soybeans and other products to move their shipments to other countries before retaliatory tariffs. With Trump’s tariffs on imports taking effect, exports surged at a 9.3% annual rate in the second quarter, while imports grew at a scant 0.5% rate.
Trump called the narrowing of the trade deficit “one of the biggest wins in the report.”
The narrowing trade deficit added a full percentage point to growth last quarter with business investment growing at a solid 7.3% annual rate. Government spending also rose to 2.1%t annual rate. The results were boosted by a budget deal at the start of the year that added billions to defense and domestic spending. Still, housing has struggled and shrank at a 1.1 % annual rate after an even sharper 3.4% annual decline in the first quarter.
The GDP report released Friday included a revision of previous years’ figures. The revisions showed that growth in 2017 came in at 2.2%, slightly below the 2.3% previously reported.
This current economic growth for 2018 other than in June of 2009, is the second-longest on record.