- The US economy grew in the second quarter at the fastest pace since 2014.
- Gross domestic product increased at an annualized rate of 4.1%, led by consumer spending, a preliminary report from the Commerce Department said.
- The US is now a $US20 trillion-plus economy, the first time a country has hit that milestone.
The US economy grew in the second quarter at the fastest pace since 2014, according to a preliminary report released by the Commerce Department on Friday.
Gross domestic product, the total value of all goods and services produced domestically, rose at an annualized pace of 4.1%. Economists had forecast 4.2% growth.
A rebound in consumer spending from the first quarter was the biggest contribution to growth. Personal consumption increased by 4% in the first full quarter after President Donald Trump’s new tax law went into effect. Business investment and government spending also increased.
“As trade deals come in one by one we’re going to go a lot higher than these numbers – and these are great numbers,” Trump said at a news conference after the report, adding: “I happen to think we’re going to do extraordinarily well in our next report.”
Exports surged in Q2 as expected. The Commerce Department said earlier this month that soybean exports surged as buyers stockpiled ahead of China’s imposition of 25% tariffs.
“In one line: Looks great; won’t last,” Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in a note. Many economists are doubtful that the economy can sustain a 4% growth rate, partly because of a yearslong slowdown in productivity.
Trump had already hinted at a strong GDP report, again breaking with the tradition of US presidents not commenting on major economic data before its release.
“If it has a four in front of it, we’re happy,” Trump said Thursday during a rally at a steel plant in Illinois. A 3% handle would be “OK,” he added. Trump also talked up the May jobs report, which turned out to be strong.
Besides Trump’s hint, there were other reasons the economy was expected to accelerate in the second quarter from the upwardly revised 2.2% pace of growth recorded in Q1.
First-quarter growth tends to undershoot the rest of the year because of the so-called residual-seasonality issue that stems from how the Commerce Department adjusts for calendar and holiday effects.
Friday’s report was based on preliminary data; the Commerce Department will release revisions over the next two months as it gets more complete data.
The report also said the US is now a $US20 trillion-plus economy, the first time a country has hit that milestone.
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