Trump claims victory with GDP number as trade war looms

Jason Furman and Barack Obama

Top Obama Economist GDP Even Stronger Than It Looks Getty 27 Jul 2018

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". But in 2020 - a presidential election year - Zandi said he is forecasting economic growth of just 0.9 percent, a pace that is so slow that it will raise the threat of a recession. "It'll be hard to repeat this performance on a sustained basis". That's because, ahead of retaliatory tariffs by China on USA agricultural products, China went on a soybean buying spree. "While Democrats are declaring their desire to take our country back to a time when Main Street businesses were pessimistic about the future, families paid higher taxes, and our global competitors all leaped ahead of us, Republicans are determined to build on this growth to continue strengthening our economy for workers and families".

The dollar was little changed versus a basket of currencies.

Trump, commenting on the release of the second-quarter figures Friday, said the "on track to hit the highest annual growth rate in over 13 years".

TRUMP: "One of the biggest wins in the report, and it is, indeed a big one, is that the trade deficit - very dear to my heart because we've been ripped off by the world - has dropped".

The total value of all US stocks is now equal to 154 percent of the annualized GDP. The first reading. which is what Friday's number was, is mostly made up of estimates. Growth was in line with economists' forecasts and significantly higher than the revised 2.2 per cent reported in the first three months of the year. He predicted it would be close, though economists surveyed by the Journal believe a figure of around 4.4% second-quarter growth is more likely. But for the most part, the GDP report suggest a strong economy, with consumer spending going up 4 percent and business investment rising 7.3 percent.

"We must replace the present policy of globalism - which has moved so many jobs and so much wealth out of our country - and replace it with a new policy of Americanism", Mr. Trump said in a September, 2016, speech before The New York Economic Club.

One measure that economists look at for a better sense of underlying demand showed strength.

Today's government report that the economy grew at an annual rate of 4.1 percent was good news- but it quickly raised a widespread question: is it sustainable? Purchases of new autos were a major factor, along with spending on health care, housing and utilities and food services and accommodations. They subtracted 1.0 percentage point from GDP growth. Unemployment among Blacks, Hispanics and women is now at record lows. "And the year-over-year growth rate is just above the long term trend of 1.8 percent". At the same time, residential investment fell for the fourth time in five quarters. The drag on overall growth, though, was negligible.

The gains were driven by strong consumer spending and a surge in exports as firms rushed to beat new trade tariffs.

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