Article by Bryan Howard
July 27, 2018
The second quarter results are in for United States economy and it was “YUGE” with a Gross Domestic Product (GDP) grew 4.1%. This was after the amazing first quarter growth in GDP of 2.2%.
In the second quarter of 2018, consumer spending grew 4%, while nonresidential business investment jumped 7.3%, both are “YUGE” numbers. After these numbers were released President Trump ran to talk about this great success stating,
“We’re going to go a lot higher,” Trump said. “As the trade deals come in one by one, we’re going to go a lot higher than these numbers, and these are great numbers. …
“We’ve accomplished an economic turnaround of historic proportions,” Trump said. “Once again, we are the economic envy of the entire world.”
“Exports rose in part as farmers rushed to get soybeans to China ahead of expected retaliatory tariffs to take effect in the coming days. Declines in private inventory investment and residential fixed investment were the main drags, the report said.
The tariffs as well as last year’s massive tax cut both were key factors in the growth.
“Bottom line, if it wasn’t for a big upside to inflation, GDP would have been much better because of the upside in spending, boost in exports and government spending which offset an unexpected sharp decline in inventories and no change in gross private investment,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.”
Many economists are claiming the GDP growth has everything to do with President Trump’s tax cuts.
“When you drop taxes and increase spending, even if some of it is saved rather than spent, it boosts growth,” Jim O’Sullivan, chief economist at High Frequency Economics, told CNBC. “Ultimately, that boost won’t last forever, and of course you’ve added to the government debt. But there’s no question that it’s stimulative.”
The Tax cuts on Corporations have increased company spending which resulted in more jobs in America than people actively looking for jobs. Also, thousands of companies have raised their wages due to the corporate tax cuts.
This may end up being the first time in 14 years the GDP growth for a full year is 3% on average.