Gross Domestic Product Increased 4.1% in Q2
The U.S. economy got some good news this morning as the government announced that the country’s gross domestic product grew by 4.1% in the second quarter. That represents the strongest quarter since Q3 of 2014 when growth reached 4.9%. Moreover, as CNBC reports, the Commerce Department has revised their first-quarter growth report to note a 2.2% growth as opposed to the originally announced 2% increase.
Naturally the news led President Donald Trump to take a victory lap, saying in a press conference, “We’re on track to hit the highest annual growth rate in over 13 years. And I will say this right now and I will say it strongly, as the deals come in one by one, we’re going to go a lot higher than these numbers, and these are great numbers.” The President went on to say, “We’ve accomplished an economic turnaround of historic proportions.”
CNN Money notes that, were the U.S. economy to end the year with a 3% growth rate, it would be the highest annual rate seen since 2005. That said many economists are expecting lower growth numbers in the third and fourth quarters of the year, with continued slowing in the coming years. The prevailing belief for this expected trend is the waining impact that the GOP-backed tax law will have going forward.
This GDP growth report also arrives at a time when it seems like President Trump is readying a trade détente after weeks of war. Earlier this week it was reported that the United States had reached an agreement with the European Union to suspend new tariffs. Now attention turns to our neighbors Canada and Mexico as well as to China, where a trade war has escalated in recent weeks. To that point, economic adviser Larry Kudlow signaled that the deal between the United States and Europe will have implications on the China front, saying, “U.S. and EU will be allied in the fight against China, which has broken the world trading system, in effect. President Juncker made it very clear yesterday that he intended to help us, President Trump, on the China problem.”
As many of the talking heads you’ll see on television this morning will admit, 4.1% quarterly GDP growth is a strong number. However the debate is over whether such growth is actually as sustainable as the President has suggested. With many economists betting against that premise, it’ll be interesting to see what notion prevails as we head forward.