U.S. economy posts best performance since late 2014

Sunday, 29 Jul, 2018

In July, the United States and China imposed tariffs on $34bn of the other country's goods.

But the report got another boost from an unusual source: strong exports which leapt 13.3 per cent, driven higher by foreign sales of oil and soybeans, which now face stiff Chinese tariffs.

The US economy expanded at an average annual growth rate of 2.2% between 2012 and 2017. Unemployment among Blacks, Hispanics and women is now at record lows.

TRUMP: "One of the biggest wins in the report, and it is, indeed a big one, is that the trade deficit - very dear to my heart because we've been ripped off by the world - has dropped". That number strips out volatile inventories data, trade, and government spending.

"We've accomplished an economic turnaround of historic proportions", Trump said in remarks at the White House Friday morning.

"We're getting explosive growth in the second quarter because of trade", economist Ellen Zentner of Morgan Stanley tells the Times. The personal savings rate also fell in the second quarter, hitting 6.8% against 7.2% in the first quarter of the year. In case you don't know what that means, this is it: The economy, with all the estimates and guesstimates put into Friday's figure, actually grew by 1.025 percent in the second quarter.

"These numbers are very, very sustainable", Mr. Trump said. "This is no one-shot deal", said Kudlow.

"Since I was elected we've added 400,000 new manufacturing jobs". When Republicans passed their multitrillion-dollar corporate-tax cut last winter, they insisted that the legislation would stimulate capital investment, and thus innovation, and thus growth.

PNC Bank is forecasting growth of 3.1% in 2018 - assuming that trade tensions dissipate. The rest of the year is likely to see good, but slower growth of around 3 percent.

It may also be his best chance to argue that a huge and controversial tax cut, the only really significant legislation he has managed to pass, is - as he said it would - unleashing prosperity... Government spending also posted a solid gain, rising at a 2.1 percent annual rate.

The robust report made it highly likely the Federal Reserve will continue gradually raising short-term interest rates to prevent the economy from overheating.

Housing remained a weak spot in the economy amid signs that the sector is poised for its broadest slowdown in years.

"The spring quarter could be the high water mark for growth", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Trump also repeated his claim that the USA has a trade deficit with Canada, but that is true only in goods. But today's economic data is certainly good, and the president can take some of the credit. He campaigned on a platform of tax cuts for businesses and individuals, as well as deregulation. Perversely, so did the threat of various trade rows.

The President is upset that the US central bank has raised interest rates twice so far this year, but it is precisely the Trump administration's inflationary fiscal policies that have forced the Federal Reserve to tighten monetary policy faster than it would otherwise.

The latest growth number is twice what it was in the first quarter.

But most economists say such a strong growth rate is unlikely to last.

There are worries that America's numerous trade spats are now hitting economic growth.

It was a good week for the economy, which is why our weekly Trump-o-meter reads BIGLY, our second highest score.