Economy

Is this the clearest legal danger yet to the Trump presidency?

Is this the clearest legal danger yet to the Trump presidency?

On Friday, the Commerce Department reported that the US economy grew at an annual rate of 4.1 percent between April and June.

The 4.1 percent growth is the fastest economic growth since 2014, when the economy grew at 4.9 percent in the third quarter of that year.

"We're on track to hit the highest annual average growth rate in over 13 years", Trump said in remarks at the White House.

It's also more than double the 2 percent annualized growth reported in 2018's first quarter.

It's not traditional for presidents to comment on economic growth figures before they are released, but President Trump isn't exactly a stickler for tradition.

"The trade deficit, very dear to my heart - because we've been ripped off by the world - has dropped by more than $50 billion, $52 billion to be exact ..."

Another key factor that bolstered growth was a rush by exporters of soybeans and other products to move their shipments to other countries before retaliatory tariffs in response to Trump's tariffs on imports took effect.

Fed policy makers are expected to continue their gradual pace of interest-rate hikes aimed at keeping the economy from overheating, without moving so fast that they could choke off growth.

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The tax cuts and spending hikes are swelling the government's annual deficits upward, with no sign of the increased tax revenue supply-siders say will arrive as growth improves.

It also showed that inflation, which has been lacklustre in recent years, rose by 2% according to the Fed's preferred measure, which is tied to consumer spending, except on food and energy. That was almost double the first quarter rate of 2.2 percent and the strongest pace in almost four years.

Nobody can dispute that the United States economy had good growth in the second quarter.

Already announced tariffs are forecast to be only a slight drag on economic growth, unless more are imposed.

The important questions to ask about Mr. Trump's economic policies have nothing to do with their short-term impacts, which are explained in Economics 101, but rather with the damage they threaten to inflict on the US and global economies in the longer term. Net exports added 1.06 percentage point to the quarter's 4.1 per cent GDP growth rate, as exports rose strongly. Nonetheless, President Trump can say he's put the economy on a much more solid footing not just for now, but with lower tax rates and less government regulation, for the longer term too.

"The spring quarter could be the high water mark for growth", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. From left, Commerce Secretary Wilbur Ross, Trump, Vice President Mike Pence, and Treasury Secretary Steve Mnuchin.

"We will come pretty close to stalling out in 2020 because the growth we are seeing now is not sustainable", Zandi said.