GDP grew at 4.1 percent rate in Q2
Published 12:00 am Saturday, July 28, 2018
The Commerce Department released its initial estimate of second-quarter economic growth Friday, providing the latest snapshot of the U.S. economy.
U.S. gross domestic product rose at an annual rate of 4.1 percent in the second quarter, up from 2.2 percent in the first three months of the year. It was the strongest quarter of growth since 2014.
Consumer spending rose 4 percent, but private investment fell slightly as the housing market cooled.
Exports rose 9.3 percent, driven in part by a surge in soybean shipments tied to President Donald Trump’s trade policies.
Consumer prices rose at a 1.8 percent annual rate.
The second-quarter acceleration was widely anticipated by economists, a result of a confluence of events unlikely to recur. Most economists expect growth to slow in the second half of the year.
Still, recent data suggests the pace of growth has picked up this year. Some economists think full-year growth in gross domestic product could hit 3 percent in 2018 for the first time in the nearly decade-long recovery. The second quarter was the first time since 2014 that economic growth topped 4 percent in a quarter.
“The bottom line is that the economy is doing better,” said Diane Swonk, chief economist for the accounting firm Grant Thornton.
Trump celebrated what he called the “amazing” GDP number in remarks at the White House on Friday. He pushed back against economists who say the second quarter’s growth rate is unsustainable.
“This isn’t a one-time shot,” Trump said. “I happen to think we’re going to do extraordinarily well in our next report, next quarter.”
Friday’s figures were pumped up by a surge in exports, which accounted for a quarter of the total growth for the quarter. Paradoxically, the export boom was driven in part by mounting trade tensions, which led foreign buyers to stock up on U.S. products before their governments imposed tariffs.
The trend is particularly clear in exports of soybeans, which were up over 50 percent in May from a year earlier. Those buyers presumably didn’t want more soybeans than usual — they wanted them sooner. Exports will almost certainly slump in the third and fourth quarters.