WASHINGTON — The U.S. economy grew by an annualized rate of 4.1 percent in the second quarter of 2018, a jump from the year’s first quarter and the strongest growth since 2014, the Commerce Department reported Friday.
President Donald Trump hailed what he called the “amazing” growth rate, but forecasters cautioned one-time factors such as the explosion in soybean exports ahead of U.S. tariffs drove an expansion that could be short-lived.
Still, the growth spurt in the gross domestic product aids Trump and Republicans as they campaign on their tax cuts and deregulatory policies in a bid to hold onto their majorities in Congress in this fall’s election.
“We’re on track to hit the highest annual growth rate in over 13 years,” Trump said at a news conference outside the White House.
“And I will say this right now and I will say it strongly, 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,” he said.
Trump added his belief that the jump in GDP, from 2.2 percent in the first quarter, was not a one-time thing. “We’re now on track to hit an average annual GDP of over 3 percent, and it could be substantially over 3 percent,” he said.
The next federal report on GDP growth is scheduled for Oct. 26, shortly before the Nov. 6 election. Top Democrats remained silent on Friday’s GDP report.
Several analysts are not as optimistic as the president.
The Commerce Department reported that GDP growth in the second quarter reflected accelerations in personal consumer spending, in exports, in a smaller decrease in residential fixed investment, and increased federal, state and local government spending.
Economists and forecasters cited what they called an artificial growth from the shifts made to avoid the new tariffs announced in July — especially China’s purchase of U.S. soybeans, crude oil and other exports before Trump’s 25 percent tariffs took effect.
Net exports added 1.06 percentage point to the quarter’s 4.1 percent GDP growth rate, the Wall Street Journal reported. Earlier this month, the Commerce Department said U.S. soybean exports surged in the second quarter as China began buying soybeans from Brazil.
“Unfortunately, this rapid growth is largely the effect of a one-time sugar high and is not representative of likely growth over the course of the next year, let alone the next decade,” said an analysis by the nonprofit nonpartisan Committee for a Responsible Budget.
“Most analysts continue to estimate that real GDP will grow by about 3 percent this year and by 2 percent or less annually over the next decade,” it said.
The Federal Reserve predicts annual growth will be 2.8 percent this year and then fall back to 2.4 percent in 2019 and 2 percent in 2020.
The second-quarter increase in GDP was in line with economists’ expectations, Reuters reported. With Friday’s report the government also published comprehensive revisions to prior GDP data, which did not change the previously presented economic picture.
The quarterly annualized GDP growth rate of 4.1 percent is the highest since 2014, which had quarters of 4.6 percent and 5.2 percent growth.