Economy grows at fastest pace in four years

A big rebound in spending by Americans and a sharp rise in exports and business investment powered the U.S. economy to its fastest  growth in four years this spring, the government reported Friday.

The nation’s gross domestic product – the value of all goods and services produced in the U.S. – increased at a seasonally adjusted annual rate of 4.1 percent from April through June, the Commerce Department said. That’s the largest gain since the third quarter of 2014. Economists had predicted a 4.2 percent increase.

But at least part of the gains in the second quarter can be traced to U.S. businesses boosting exports ahead of tariffs imposed by President Donald Trump as part of his trade dispute with global trading partners. The benefit of companies pulling forward business activity is likely to reverse after the tariffs take effect in the third quarter and beyond. Those levies would make it difficult for the economy to keep up the fast past of growth, economists say.

It could also be hard for the current pace of growth to continue as the short-term boost from the tax law change fades and interest rates continue to move higher, Paul Ashworth, chief U.S. economist at research firm Capital Economics, wrote in a report.

“The economy enjoyed a strong first half of this year, but as the stimulus fades and monetary policy becomes progressively tighter, we expect GDP growth to slow markedly from mid-2019 onwards,” Ashworth wrote.

[Read More]

Add a Comment

Your email address will not be published. Required fields are marked *