The US economy accelerated last quarter at an annual rate of 4.1 percent, the US government estimated on Friday, as consumers spent tax-cut money, businesses stepped up investment and exporters rushed to ship their goods ahead of retaliatory tariffs.
The US Department of Commerce said that GDP posted its best showing since a 4.9 percent annual increase in the third quarter of 2014. The GDP report released on Friday included a revision of previous years’ figures. The revisions showed that growth for last year came in at 2.2 percent, slightly below the 2.3 percent previously reported.
US President Donald Trump said he was thrilled with what he called an “amazing” growth rate — the strongest quarterly figure since 2014 — and said it was not “a one-time shot.”
At a White House appearance on Friday with his top economic advisers and US Vice President Mike Pence, Trump said that “we’ve accomplished an economic turnaround of historic proportions.”
He said the economy would fare “extraordinarily well” this quarter and that growth for this year as a whole would be the best in 13 years.
However, economists said the pace of growth in the April-June quarter will likely not last in the months ahead.
They said that the pace in the second quarter was due mainly, though not entirely, to temporary factors.
Most analysts are forecasting that growth this year could reach 3 percent, which would be the best since a 3.5 percent gain in 2005.
However, many said that the annual 4.1 percent growth rate last quarter is likely the high point for any one quarter.
Many said that annual growth in the second half of this year will be 2.5 to 3 percent.
Consumer spending, which accounts for about 70 percent of economic activity, reached a 4 percent annual growth rate after a lackluster 0.5 percent rate in the first quarter, while exports surged at a 9.3 percent annual rate in the second quarter and imports grew at a scant 0.5 percent rate, the department reported.
Business investment grew at a solid 7.3 percent annual rate. Government spending also posted a solid gain, rising at a 2.1 percent annual rate. The result was boosted by a budget deal at the start of the year that added billions to defense and domestic spending.
However, housing shrank at a 1.1 percent annual rate after an even sharper 3.4 percent annual decline in the first quarter.
“The second quarter was a strong quarter, but it was juiced up by the tax cuts and higher government spending,” Moody’s Analytics chief economist Mark Zandi said.
Zandi said that growth for this year would reach 3 percent.
He said there should be solid 2.6 percent growth next year.
However, in 2020 — a presidential election year — Zandi is forecasting growth of just 0.9 percent, a pace so slow it will raise the threat of a recession.
“We will come pretty close to stalling out in 2020, because the growth we are seeing now is not sustainable,” Zandi said.
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