US Q2 GDP growth hits 4.1%, best pace in 4 years

Workers at the Hollywood Bed Frame Company attend an event to mark the company's upcoming expansion which will double the manufacturer's workforce adding 100 new local jobs at the company's factory in Commerce California seven miles (11

Soaring Consumer Spending Drives GDP to 4.1% in Q2 ROBYN BECK AFP Getty 27 Jul 2018Washington DC

- The U.S. economy surged in the April-June quarter to an annual growth rate of 4.1 percent. The import duties are seen undercutting economic growth, with higher prices for goods discouraging consumer spending and businesses shelving investment plans.

The White House didn't respond to a question about whether Trump had been briefed in advance on Friday's report on economic growth. "In our forecasts, the second quarter marks a high watermark for growth".

Growth in consumer spending, which accounts for more than two-thirds of US economic activity, is forecast accelerating from the first quarter's lethargic 0.9 percent rate, which was the slowest in almost five years.

This is the first time since the 2016 election that United States growth has hit the 4% target President Trump set himself during the campaign.

Private forecasters cautioned that the April-June pace may be unsustainable because it stems from temporary factors. That means for the entire year, growth will be about 3%, not much better than we have seen in the past few years.

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Many analysts, however, said USA economic growth was boosted by temporary factors that will fade over the next few months.

However, there is concern the USA economy is overheating and the growth is aided by stimulus, including massive tax cuts, which will soon run out. We are unpacking the latest GDP numbers - 4.1 percent growth in the second quarter. "We are on track to reach the highest annualized growth rate in 13 years", Trump said on the South Lawn in a news conference Friday morning.

Many economists forecast growth will drop back to roughly 2.5 per cent to 3 per cent in the third quarter.

The Fed last month estimated that the USA economy would grow at 2.8 percent this year, still below the Trump administration's target of over 3 percent of annual growth rate.

Compared to the second quarter of 2017, the economy grew 2.8pc. Many think annual growth in the second half of this year will be 2.5 percent to 3 percent.

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Consumer spending, which accounts for 70% of economic activity, rebounded to a 4% annual growth rate after turning in a lacklustre 0.5% gain in the first quarter.

Exports of US soybeans soared as companies sought to ship them to China before that country slapped tariffs on them in retaliation for USA tariffs on Chinese goods.

In Q2 of 2018, consumer spending grew 4%, while nonresidential business investment jumped 7.3%, both also considered strong numbers.

"Moments ago, the numbers for America's economic growth - or GDP - were just released". The economy expanded 2.9 per cent in 2015, though it slowed the following year. Federal-funds futures were pricing in a 93% probability for another 25-basis-point increase in the central bank's target rate (currently 1.75%-2%) at its September 25-26 meeting, unchanged from Thursday, according to Bloomberg. Economists also expect slower growth in 2019 and 2020.

An economic slowdown could be ahead for the United States, not robust growth.

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