US GDP accelerates to 4.1% growth after Trump's tax cuts

Posted July 29, 2018

President Donald Trump is predicting growth will accelerate under his economic policies.

As President Donald Trump and corporate media outlets on Friday enthusiastically touted new GDP figures showing that the USA economy grew by 4.1 percent in the second quarter of 2018, many economists and progressive commentators were quick to counter the glowing headlines by pointing out that corporations and the rich are feasting on most of the growth while workers see their wages fall. Trump has said he sees annual growth of 3 per cent or more as sustainable.

"These numbers are very, very sustainable".

Investors don't seem as impressed.

U.S. second quarter grew at 4.1% but GDP failed to meet some of forecasters' loftiest targets. "If I would have used these numbers during the campaign, the fake news back there would've said he's exaggerating".

Most economists caution this is likely to be a one-off growth spurt and not a new sustained trend.

Yet, even as he touted the benefits of future trade deals, analysts say the risks from tariff wars and a fading effect from tax cuts could limit the pace of growth going forward. "It's a nine-year-old expansion".

The president portrays an economy breaking free of its shackles as his administration cuts red tape and lowers taxes.

"We were abused like no nation has ever been abused on trade before because we had nobody watching". Trump visited Granite City, Illinois, this week to celebrate the reopening of a US steel mill.

"This isn't a one time shot", he said on Friday. They're opening up seven other plants and the steel industry is back - and the tariffs did it. "They're open for business". But then the economy coughed up a 1.9 percent gain in the fourth quarter. Trump rode to the White House partly on his popularity on Rust Belt states such as MI and Ohio. "Manufacturing jobs are among our best jobs and we're just getting started", he added. "So I would guess the next time we write down our forecast for a year that it will go up by a couple of tenths".

The strong second-quarter growth reflected large increases in orders of durable goods, investment in non-residential construction, exports, intellectual property, and government defense spending.

Trump is celebrating data showing the USA economy surged in the April-June quarter to an annual growth rate of 4.1 percent.

Second-quarter economic growth came in at an annual rate of 4.1%, the government said Friday.

Trump's victory lap caps a week in which he softened his stance on trade.

The Democratic National Committee downplayed the positive report, saying in a statement, "Trump will try to boast about the economy, but the reality is that economic growth is not expected to continue at the same rate and workers have not benefited". Still, Trump may have been looking in the rear-view mirror when he predicted a growth boom. But in 2020 - a presidential election year - Zandi said he is forecasting economic growth of just 0.9 percent, a pace that is so slow that it will raise the threat of a recession.