Trump Breaks Tradition on GDP Figures

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United States second quarter grew at 4.1% but GDP failed to meet some of forecasters' loftiest targets.

"It's only going to get better", the president said Thursday during a trip to Iowa and IL. That was a pickup from the first quarter's revised growth rate of 2.2 per cent, the New York Times reported. Compared to the second quarter a year ago, output grew 2.8 per cent. Trump has said he sees annual growth of 3 per cent or more as sustainable.

The second quarter was big for the USA economy.

Contrary to Trump's assertions, the economy enjoyed periods of robust growth during the Obama administration.

The economy managed to grow by more than 4 percent in the second quarter despite the fact that firms shed inventories at the fastest quarterly pace since 2009.

It's not traditional for presidents to comment on economic growth figures before they are released, but President Trump isn't exactly a stickler for tradition. Ian Shepherdson, the chief economist of Pantheon Macroeconomics, says the Trump administration's ongoing trade fight with China is a big threat to the economy. And he delivered on those promises, by cutting government red tape and getting the biggest tax cut through Congress since President Reagan in 1981.

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But few economists expect the US can attain the president's goal of sustained growth of three percent.

The report showed imports rose only 0.5 per cent, the smallest increase in two and a half years.

The dollar trimmed gains versus a basket of currencies on the data, while Treasury yields retreated from session highs. And, ironically, Trump's various protectionist measures spurred a boom for USA exporters - because foreign buyers were eager to stock up on American goods before their governments slapped retaliatory tariffs on such products. Economists in a Reuters poll earlier this week predicted that growth will slow notably from here. "And the year-over-year growth rate is just above the long term trend of 1.8 percent".

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At an event on Thursday, Trump said of the GDP number, "If it has a 4 in front of it, we're happy". Purchases of new autos were a major factor, along with spending on health care, housing and utilities and food services and accommodations.

Overall, the-second quarter GDP release points to an economy with remarkable momentum, as both consumers and businesses are in a position to continue spending heartily for the foreseeable future.

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With Friday's report the U.S. government also published comprehensive revisions to prior GDP data, which did not change the previously presented economic picture.

The rush to offload soybeans, however, depleted farm inventories.

But economists have begun to question whether it can continue at this pace in the face of trade tension and rising rates.

And that 4.1 percent growth is an "annualized" figure.

"It's in anticipation of a trade war", MacGuineas said.

General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV on Wednesday cut their full-year profit forecasts, citing higher steel and aluminum costs.

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Investment in homebuilding fell for a second straight quarter. The result was boosted by a budget deal at the start of the year that added billions to defense and domestic spending.

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