The US economy is booming – Trump is confirmed

Things get better: President Donald Trump briefs the press in front of the White House of the US economy. (Image: Jim Lo Scalzo / EPA)

The US economy is currently also a growth driver internationally. As announced Friday the US Department of Commerce, gross domestic product (GDP) grew 4.1% in the second quarter according to preliminary estimates, adjusted for inflation and annualized seasonally adjusted. The rise was only 2.2% in the first quarter

Most economists expect that expansion will remain solid over the next few months, but doubt that the current pace is maintained. President Donald Trump, on the other hand, said Friday in the White House garden that the numbers prove that the country had entered a new phase of growth after a decade of poor results. This new dynamism triggered its policy of tax reform and deregulation

Strong increase in exports

Indeed, the quarterly result is composed of a number of factors whose continued development remains uncertain. This is especially true for foreign trade, which has contributed exceptionally to the increase with more than one percentage point. Exports rose by 9.3% and reduced the trade deficit by more than $ 50 billion to the satisfaction of the President

. But it is a development that can not last. In addition, the export boom has been characterized by a sharp increase in soybean exports, linked to the aggressive trade policy of the president. The buyers wanted to fill their warehouses before the entry into force of the high tariffs, which the Chinese government ordered as a countermeasure against US tariffs on Chinese exports.

But there are also a number of factors with greater retention power. These include consumer spending, which accounts for about two-thirds of GDP. They increased 4.0%. Spending on durable goods alone contributed 0.64 percentage points to the growth rate. Business expenses also play an important role. Their growth rate decreased from 11.5% in the first quarter to 7.3% in the second quarter, but still remains very high. These are investments in buildings, equipment, computer products and software. In contrast, the real estate segment, which had already declined in the first three months of the year, is growing poorly. It has further decreased by 1.1%.

Public spending in the United States has increased considerably. They climbed 3.5% in the second quarter. The tax cuts decided by Congress at the end of last year also contributed to the economic boom. These should, according to the president, contribute to the increase of US long-term growth to more than 3%, but it is unclear what will be the impact of their impact.

Electoral Support

Economists often rely on retail sales to support the underlying strength of the economy. This does not take into account government spending, foreign trade and inventory changes. In the second quarter, those in the United States grew 5.1% and were significantly higher than in the first quarter.

Politically, the latest GDP figures, despite all the reservations, are good news for the president and his Republican party. They should give the Republicans a boost in the mid-term congressional elections in early November. The following quarterly data will be published shortly before the elections.

However, the latest figures should not lead the Fed to change its policy of gradual rate hikes, even though Trump has already indicated that he would favor low interest rates. Although the inflation rate has slowed slightly to 1.8%, it remains close to the target of 2%. As long as the US economy is flourishing, the monetary authorities will have to slow down.