US economy grows by 4-year high of 4.1%
Washington: The US economy surged in the April-June quarter to an annual growth rate of 4.1 per cent. That's the fastest pace since 2014, driven by consumers who began spending their tax cuts and exporters who rushed to get their products delivered ahead of retaliatory tariffs.
President Donald Trump told reporters at the White House that he was thrilled with what he called an "amazing" growth rate and said it wasn't "a one-time shot."
However, private economists took issue with that forecast, saying the second quarter performance isn't likely to last in the months ahead.
The Commerce Department reported today that the gross domestic product, the country's total output of goods and services, posted its best showing since a 4.9 per cent gain in the third quarter of 2014.
Trump, who has repeatedly attacked the economic record of the Obama administration, pledged during the 2016 campaign to double growth to 4 per cent or better. But private forecasters cautioned that the April-June pace is unsustainable because it stems from temporary factors. The rest of the year is likely to see solid, but slower growth of around 3 per cent.
"We have accomplished an economic turnaround of historic proportions," Trump told reporters at a White House briefing attended by his top economic advisers.
Paul Ashworth, chief US economist at Capital Economics, said that as the government stimulus from tax cuts and higher spending fades, and the Federal Reserve's continued interest rates hikes begin to pinch, "growth will slow markedly from mid-2019 onwards."
The latest GDP figure was nearly double the 2.2 per cent growth rate in the first quarter, which was revised up from a previous estimate of 2 per cent growth.
Consumer spending, which accounts for 70 per cent of economic activity, rose to a 4 per cent annual growth rate after turning in a lackluster 0.5 per cent gain in the first quarter.
Consumers began spending their higher take-home pay on autos and other big-ticket items, spurred by the USD 1.5 trillion tax cut Trump pushed through Congress in December.
Forecasters expect healthy consumer spending in the second half of this year but a slower pace than in the spring.
Another factor that bolstered the second quarter was a rush by exporters of soybeans and other products to get their shipments to other countries before retaliatory tariffs in response to Trump's get-tough trade policies took effect. Exports rose at a 9.3 per cent rate in the second quarter, while imports grew at a tiny 0.5 per cent rate.