Despite Trump's claims, very few countries see 7 percent GDP growth

31 August, 2017, 01:34 | Author: Valerie Burke
  • In the second quarter the US economy hit the growth target for the first time in Mr Donald Trump's presidency

The economy will also be boosted by higher spending on the military and infrastructure projects, Zandi said.

Even with the expected upward revision, GDP growth is still falling short of the optimistic goals President Donald Trump hopes to achieve through tax cuts, regulatory relief and tougher enforcement of trade agreements.

The saving rate also slipped to 3.7% from 3.9% in the first quarter.

"We expect Harvey to slow GDP growth by anywhere between 0.1 and 0.4 percentage points, with Q3 growth likely to come in in the 2.5 percent to 3.0 percent range given current tracking", added TD Economics.

"As is the case with most natural disasters, the impact on the US economy will likely be both small and mixed as the early disruption to production and potential spikes in gas prices fade and are replaced by the positive impact of fix and reconstruction efforts", said David Kelly, chief global strategist at JPMorgan Funds.

The upgrade in GDP "has been somewhat positive for the US dollar and negative for fixed income", says Royce Mendes, director at CIBC Capital Markets, in an economics note.

This is the fastest quarterly growth rate in more than two years.

But economists said it did not alter the picture significantly. The average for the first half of 2017 was 2.1%.

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Corporate profits (after IVA and CCA) increased by $26.8bn (1.3%) in the second quarter after a decrease of $46.2bn (2.1%) in the first quarter. "This raises doubts on the sustainability of the robust pace of consumer spending".

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent (revised) in the first.

The figure was revised up by an unusually-large four-tenths from last month's growth estimate, due to higher consumer spending and business investment than in the initial report.

The growth is "impressive given the lack of policy reforms out of Washington D.C.", said Joseph Brusuelas, chief economist at RSM, a tax and consulting firm.

Meanwhile, residential investment subtracted less that thought previously, shrinking 6.5 percent as did net exports that totalled -USD 613.4 billion. At the same time, private inventories stabilized in the second quarter but added just 0.02 percentage points to headline growth.

It will take more than one quarter's data for the White House or congressional Republicans to be able to claim credit for lifting the economy's growth trajectory.

Nonresidential fixed investment increased by 6.9 percent in the second quarter, extending the 7.2 percent growth rate from the first quarter. Motor vehicle production rebounded after two straight quarters of declines.

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