Posted by News Express | 28 July 2018 | 1,096 times
The US economy grew at its fastest pace in nearly four years in the second quarter as consumers boosted spending and farmers rushed shipments of soyabeans to China, to beat retaliatory trade tariffs before they took effect in early July.
GDP rose at a 4.1% annualised rate also as government spending picked up, the commerce department said in its snapshot of second-quarter GDP on Friday. That was the strongest performance since the third quarter of 2014.
GDP growth for the January-March quarter was revised up to a 2.2% pace from the previously reported 2.0% rate, to account for new source information and methodology improvements.
Compared to the second quarter of 2017, the economy grew 2.8%. Output expanded 3.1% in the first half of 2018, putting the economy on track to achieve the Trump administration’s target of 3% annual growth.
A measure of domestic demand surged at a 4.3% rate in the second quarter. Ahead of the release, US President Donald Trump and members of his economic team had been promoting the notion that second-quarter growth would be robust.
Earlier in the week he tweeted that the US had "the best financial numbers on the planet". The second-quarter increase in GDP was in line with economists’ expectations. With Friday’s report, the government also published comprehensive revisions to prior GDP data, which did not change the previously presented economic picture.
The US slapped 25% duties on $34bn worth of Chinese goods effective July 6, provoking a similar response from Beijing, which targeted soyabeans and other agricultural products as well as US-made cars.
Trump has also imposed tariffs on steel and aluminium imports, leading to retaliation by the US’s main trade partners, including Canada, the EU, Mexico and China. There was also a front-loading of exports of other goods in the second quarter.
With the trade-related boost expected to unwind in the second half of 2018, economists caution against putting much weight on the April-June quarter growth. The economy will be supported by a $1.5-trillion tax cut package in 2018 and increased government spending in the last quarter.
But economists have begun to question whether it can continue at this pace in the face of trade tension and rising rates. The stimulus is expected to fade sometime in 2019. (Reuters)
•Pedestrians walk past an American flag displayed outside of the New York Stock Exchange in New York, the US. Picture: BLOOMBERG/MICHAEL NAGLE
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