US economy surges to 4.1 growth rate in second quarter

US economy surges to 4.1 growth rate in second quarter

President Trump took a victory lap Friday after the USA economy surged more than 4 percent in the second quarter - the largest quarterly jump in four years. Few economists outside the administration agree with this claim. "I think you can go to 5 percent or 6 percent", he said in October 2016 at the Vegas presidential debate.

Trump was joined on the South Lawn of the White House by a coterie of aides, including his top economic advisers: Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross, US Trade Representative Robert Lighthizer, Office of Management and Budget Director Mick Mulvaney and Kevin Hassett, chairman of the council of economic advisers.

THE FACTS: Trump didn't inherit a fixer-upper economy.

US economic growth jumped in the second quarter, a boost for President Donald Trump and Republicans as they seek to make a strong economy a key part of their campaign message to voters heading into November's midterm elections. "And it's still short of what the Trump administration promised".

Most independent economists say this quarter's growth was juiced by stimulus from the trillion-dollar tax cut and a one-time rush by foreign companies to stock up on US goods before Trump's trade war escalated and tariffs kicked in on many products. But quarterly figures are volatile and strength in one quarter can be reversed in the next.

They predicted the rest of the year is likely to see solid, but slower growth of around 3 percent.

Because of that, there seems to be consensus that this is a "blip" - driven by one-time factors, and that later this year growth will slow down because of the tariffs.

Both of those factors are largely beyond Trump's control.

Trump cheered the numbers Friday, holding an impromptu news conference outside the White House, touting the "amazing" growth from his tax and trade policies.

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"Historic unemployment, a steady rise in wages, and a variety of tax breaks likely boosted spending by businesses and consumers during the April through June period", NBC News reported.

The United States slapped 25 percent duties on $34 billion worth of Chinese goods effective July 6, provoking a similar response from Beijing, which targeted soybeans and other agricultural products as well as USA -made cars. Trump boasted the biggest takeaway is that the US deficit dropped by more than $50 billion.

"Ironically, the threat of a trade war appears to have bolstered activity in the second quarter", said Michelle Girard, chief economist at NatWest Market in Stamford, Connecticut.

Trump claimed that the U.S. has been "abused like no nation has ever been abused on trade before", including by USA allies.

THE FACTS: Even allowing for Trump's tendency to exaggerate, this overstates things.

Economists expect the ongoing trade war is likely to curtail growth later this year as foreign companies buy less from the United States. Facebook stock plunged more than 18 percent, but Amazon shares jumped more than 4 percent. The U.S. central bank increased borrowing costs in June for the second time this year and forecast two more rate hikes for 2018.

President Donald Trump on Friday seized on a strong GDP growth rate for the second quarter of the year to tout the economic gains made during his presidency and argued the U.S. is experiencing an economic boom.

Past presidents have generally refrained from mentioning any government economic reports the day before they're publicly released.

THE FACTS: No, it's not totally closed. Some experts said the numbers might be inflated as countries like China bought USA goods before an all-out trade war begins. When services are included, such as insurance, tourism, and engineering, the US had a $2.8 billion surplus with Canada past year.

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