Economic growth is a good thing - forget the politics

Tinnaporn Sathapornnanont/Dreamstime.comThe Commerce Department's Bureau of Economic Analysis says the nation's real gross domestic product grew 4.1 percent in the second quarter of 2018.

Personal consumption expenditures increased 4 percent while business investment jumped 7.3 percent, and government spending was up by 3.5 percent.

Trump seized the chance to declare his policies, including the biggest tax overhaul since the Reagan era, a success, calling the data "amazing" and "very sustainable". Many analysts believe growth will weaken as the effects fade from the tax cuts and a government spending increase. You remember that notion, made fashionable by economist Larry Summers and picked up by the press corps to explain why the US economy couldn't rise above the 2.2% doldrums of the Obama years. "It'll be hard to repeat this performance on a sustained basis".

But the report got another boost from an unusual source: strong exports which leapt 13.3 per cent, driven higher by foreign sales of oil and soybeans, which now face stiff Chinese tariffs. "We're seeing unemployment go down to levels we haven't seen since the 1990s". The dollar and yields on 10-year Treasuries declined after the report, which also showed inflation excluding food and energy was lower than estimated.

Former President Barack Obama was doubtful the man who followed him into the Oval Office could fix the sluggish US economy, but a federal report made public Friday provides solid evidence President Donald Trump is doing just that.

President TrumpDonald John TrumpWatergate's John Dean: Potential of Cohen flipping not "boding well" for Trump Giuliani attacks Cohen over Trump Tower report: He's a "pathological liar" USA military plane leaves North Korea with remains of soldiers from Korean War MORE would have us believe that his trade policies are producing a sustained decline in the trade gap.

The GDP report released Friday included a benchmark revision of the past GDP numbers.

The GDP numbers, released today, show an improvement over the first quarter's 2.2 percent growth.

The second quarter was big for the US economy. Without that surge, exports would have increased 5.3% instead of 9.3%, which means the GDP growth would have been around 3.6%, according to Paul Ashworth, the chief USA economist at Capital Economics. He has been trying to highlight economic gains ahead of the 2018 midterm elections. While Obama never achieved the 3 percent annual growth that Trump hopes to see, he came close.

Economists often look to a figure known as "final sales to private domestic purchasers" for a view of how the private sector is doing. Consumer spending, which accounts for 70 per cent of economic activity, rose to a 4 per cent annual growth rate after turning in a lacklustre 0.5 per cent gain in the first quarter.

Households bought motor vehicles and spent more on health care, utilities, food and accommodation in the last quarter. For the market to get back to 130 percent, it would require a much more robust pace of growth.