USA Records Greatest Economic Growth Since 2014
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The United States' economy accelerated to a 4.1 percent pace of growth in the second quarter, the fastest since 2014, letting President Donald Trump claim a win for his policies even though expansion is projected to cool.
The annualized rate of gains in gross domestic product was just shy
of the 4.2 percent median forecast in a Bloomberg survey. It followed
first-quarter growth of 2.2 percent that was revised from 2 percent, the
Commerce Department reported Friday. Consumer spending grew 4 percent,
more than estimated, while nonresidential business investment climbed at
a 7.3 percent clip.
Trump seized the chance to declare his policies, including the
biggest tax overhaul since the Reagan era, a success, calling the data
“amazing” and “very sustainable.” The likelihood is nevertheless that
the pace of expansion will slow as the effects of tax cuts fades,
companies pull back in the face of foreign tariffs or strong dollar and
the Federal Reserve raises interest rates further.
“The economy is doing quite well,” said Michael Feroli, chief U.S. economist at JP Morgan Chase & Co. “It will be hard to repeat this performance on a sustained basis.”
Illustrating the volatility of some elements of GDP,
net exports contributed 1.06 percentage point to the pace of growth,
the most since 2013, partly on a surge in soybean shipments ahead of
retaliatory tariffs. Inventories subtracted 1 point, the most since
2014, Commerce said, citing soybean stocks as well as those of drugs and
sundries and petroleum and related products.
Fed policy makers are expected to continue their gradual pace of
interest-rate hikes aimed at keeping the economy from overheating,
without moving so fast that they could choke off growth. The dollar and
yields on 10-year Treasuries declined after the report, which also
showed inflation excluding food and energy was lower than estimated.
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