U.S. second-quarter GDP accelerates to 4.1% annual rate

Market Watch ^ | July 27, 2018

[GonzoII]

WASHINGTON (MarketWatch) - U.S. economic growth accelerated to an annual rate of 4.1% in the second quarter, compared with a revised 2.2% in the first quarter, the Commerce Department said Friday. This is the fastest rate of growth in almost four years. The second quarter gain was close to the 4.2% rate economists surveyed by MarketWatch had forecast. The acceleration of real gross domestic product in the second quarter reflected a jump in consumer and government spending.

[God luvs America]

yup- the Fed, who held interest rates down for 8 years of obama, could hamper future GDP numbers..

[EdnaMode]

Rachel Madcow?

[raiderboy]

Astounding numbers!! 3 million off of food stamps brings such joy to my heart!! Make America Work Again!! We need public service if you get welfare!!

[mandaladon]

Stormy Daniels was unavailable for comment. See our exclusive 1 hr special tonight, only on CNN...

[Lazamataz]

Mark Levin says it should be even higher if it wasn’t for the evil tariff war started by President Trump...

Jeez Louise. This guy would get a free Kobe beef steak and complain the waiter had a weird accent.

[mandaladon]

Flashback:
“Democrat elites said President Trump’s policies would throw the US into recession.
They said a 4.0% GDP rate was impossible. It was a thing of the past.
-Hillary Clinton: “Trump’s policies would throw us into a recession, the last thing we need.”

-Barack Obama: “What magic wand do you have? And usually, the answer is he doesn’t have an answer.”

-Paul Krugman, The New York Times: “So we are very probably looking at a global recession, with no end in sight.”

-Mark Cuban, Dallas Mavericks: “In the event Donald wins, I have no doubt in my mind the market tanks.”
https://www.thegatewaypundit.com/.../flashback-democrats.../

[Lazamataz]

They always have a spin, but it’s remarkable how fast they all sync their talking points.

They have a new Journ-O-List.

[daler]

"Obama had four quarters of GDP growth of four percent or greater between 2011 and 2017..."

FWIW, I never believed any of the economic numbers (unemployment, GDP, consumer confidence, etc.) during the Obama regime.

The way they were cooking the books and spinning the numbers, it seemed as if they were constantly telling us the horrible economy was a figment of our imagination.

[dhs12345]

Democrats should be reminded of this every time they claim responsibility for the improved economy.

[usconservative]

And who will be the first pundit to say this was a result of the policies Obama had started?

Let them say it, better yet: let them BELIEVE it.

It's just more proof that the Democrats have absolutely no idea how much trouble they're in this November. This report of 4.1% GDP comes in as we go into August with the momentum to build up towards Labor Day. It's after Labor Day the rest of the country starts paying attention to what's going on politically.

They'll see 4.1% GDP, healthy pay checks, an expanding and booming job market and think to themselves "who in their right mind would want to mess this up?"

Then they'll see that batshit crazy Nancy Pelosi and Chuckie Shumer on TV, be repulsed and vote Republican in November.

Bottom line: people will always vote their best interests. In this case, it's a healthy and expanding economy and job market. Plain and simple as that.

[SoCal Pubbie]

Investor Jim Rogers was on the Larry Elder Show yesterday. He said this spurt in GDP is due to companies racing to import and export more before tariffs kick in. He also said a Trump won’t be re-elected because the economy will be in bad shape. He’s predict8ng the worst collapse ever next year or in 2020.

[God luvs America]

surprised Edler would allow a soros lackey on his show...

[Calif Conservative]

So can name “all the sources you know?”
Or any of them?

[rjsimmon]

Forbes
CNBC
NY Times
Statista.com
Marketwatch.com

[CutePuppy]

Unfortunately, it seems that this preliminary (will be revised higher or lower at least 2 times in following months) 2018Q2 number is pretty underwhelming relative to hyped expectations by Trump administration officials and the analysts:

Morgan Stanley (4.7%) Ellen Zentner

"The factors driving the headline print are trade related and will likely reverse in the second half of the year, at least in part. ... estimate trade and inventories contributed about 2.2 percentage points to the pace of second-quarter growth, which is "likely a reflection of stockpiling ahead of the implementation of trade tariffs. ... estimate final private domestic demand, a clearer fundamental picture of the economy," expanded at a much more modest 2.5 percent pace in the quarter."

Wells Fargo (4.7%) Sam Bullard

"While the robust Q2 pace should not be sustained, underlying economic fundamentals remain solid and support our outlook for U.S. real GDP to run around a 3 percent annualized rate for the remainder of the year. Trade policy poses the main risk to the outlook."

Amherst Pierpont (4.7%)strong> Stephen Stanley

"... the main driver of growth in the second quarter was likely a massive narrowing in the trade gap, due primarily to a sharp increase in real exports. Domestic final demand was strong (projected to rise 3.1 percent) but unspectacular..."

Natixis (4.4%) Joseph LaVorgna

"We expect real GDP growth to increase at a hefty pace in Q2 after a trend-like increase in the first quarter.

Bloomberg Economics (3.8%) Carl Riccardonna, Tim Mahedy

"Second-quarter growth will be robust, to be sure, and could potentially top 4 percent. However, this reflects a number of one-time idiosyncratic factors and should not be viewed as an indication of what is to come in the second half. Growth in the second quarter will be elevated in response to residual seasonality that depressed first-quarter activity. It will also be lifted by a substantial narrowing of the trade deficit in the quarter, which appears to be more a reflection of supply-chain adjustments in anticipation of trade-war escalation than any lasting improvement as a result of tariffs."

The spike in 2018Q2 resembles recent years' seasonal spikes in Q2 following relatively weak Q1's and then followed by sliding Q3 and Q4. The one-time factors accelerating this year's spike include:

• 1. Newest revisions and adjustments to how the GDP data is weighted and interpreted for 2012-2017 (e.g., weather, hedonics and qualitative analysis). For example, economy for 2016 was revised higher by $82.7B, which added 0.10% to 2016 and subtracted the same amount from 2017. Growth in the first quarter of 2016 has been revised up to 1.5 percent, from 0.6 percent. Growth in the fourth quarter of 2017 was revised down to 2.3 percent, from 2.9 percent. Growth in first quarter 02 2018 was revised up to 2.2% from 2.0% etc. etc.

• 2. There has been very high level of government spending this quarter, which is adding nearly a $1 Trillion to the annual deficits and debt, which is the real problem, not the largely irrelevant and mostly incorrectly computed "trade deficit" — due to balance-of-trade numbers that don't properly reflect multinational corporations' locations, taxes and, even more importantly, misunderstanding of the supply-chain-assembly-delivery economy.

• 3. There has been significant increase in Q2 of buying frenzy of US goods (mainly commodities and raw materials, like soybeans / sorghum etc.), ahead of potential counter-tariffs. In other words, companies expedited the purchasing and delivery of massive amounts of goods for the purpose of stockpiling in case of "trade wars" — not to buy more than usual overall but to buy faster to avoid taxes — so whatever happens or doesn't happen with tariffs next two quarters it means they likely won't be buying any more of these goods, i.e. the artificial growth in Q2 was "borrowed" from the growth number in Q3 which is being reflected in narrower trade deficit and smaller U.S. inventories this quarter and thus will be likely reflected in higher trade deficit next quarter and lower number in GDP growth by at least the "borrowed" amounts.

In a worse case scenario, foreign and U.S. companies overseas will now decide to secure contracts with more "reliable" trade partners and therefore reduce the total consumption of these sensitive goods, the way China started buying sorghum from Russia and Mexico just secured purchasing of wheat from Russia, and something similar has already been going on with foreign sources of steel and aluminum, while Coke and GM are raising U.S. prices due to higher costs, and McDonald's is starting to see lower traffic overseas, most specifically in Asia.

We've already seen the farmers being offered a trade-wars-related $12B bailout by the government, due to increased costs as well as current and/or projected lower sales.

Same goes for new cozier and "more free" trade relations between EU and China and Japan. **

IOW, with all the upside revisions and one-time positives "borrowed" from the next quarter or two, one would have hoped to have much higher number than barely eaking above 4% growth. Especially with all the hype leading up to the release of the numbers the minimum expectation would be around 4.5% which would help cushion the fallback in next quarter.

_________________

** Japan, EU eliminating most tariffs in trade deal - TH, by Brett Samuels, 2018-07-17

[Rebelbase]

“Democrats should be reminded of this every time they claim responsibility for the improved economy.”

A perfect Trump campaign ad for 2020. Open with Obama saying ‘those jobs are gone’, then Romney saying Trump’s plan will create a recession, then Hillary slamming coal jobs, then bleed into images of the booming economy and trump being hailed the conquering hero at one of his rallies.

[heights]

Drudge had a link to a CBS ‘Market Watch’ analysis last night, that claimed Obama had a year of steady 3.1 GDP in 2014, topped off with a quarter of 5.1 growth. It was like reading ‘News from Bazarro World’. One LIE after another. The main lie of the article was, ‘Too bad Trump can’t manage great growth, like Obama’. I will bet you will see more of this type of lies. The Networks work together, expect to see LIES.

[dhs12345]

Exactly! Perfect.

[Terry Mross]

The rinos, led by George Bush, could have begun producing these kind of numbers in 2001. It took a strong MAN to force the rinos in the Senate to get on board. And if they had produced these numbers no democrat, like Obama, would have ever been elected.

[Terry Mross]

Perot said “2.8 ain’t so great.”