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For Federal Reserve decision-makers, tax cuts and increases in spending could be a shorter-term challenge. The Fed has tried to find a delicate balance, gradually increasing interest rates in an effort to contain inflation without stifling the recovery. If the second quarter growth rate continues, it could risk accelerating inflation and prompting the Fed to increase rates faster. This, in turn, could cause a recession.
There is little to suggest that this will happen, however. Inflation has slowed slightly in the second quarter, and Friday's report should not convince the authorities to move away from their gradual and carefully crafted move towards higher interest rates. The central bank is on track to raise rates twice this year, following two increases in the first half of the year.
The most immediate risk is the possibility of a trade war. Mr Trump has imposed duties on billions of dollars worth of imports from China, the European Union and other countries. Business partners responded by imposing retaliatory tariffs, and both parties threatened further.
Tensions with Europe seemed to ease this week when Trump and Jean-Claude Juncker, the president of the European Commission, agreed to work. But the sustainability of this truce is unclear, and relations with China remain tense.
Trade frictions have not yet cooled the confidence of business leaders, let alone led them to change their behavior. In conference calls in recent weeks, executives said they were closely monitoring tariff announcements, and companies like General Electric, Whirlpool, and United Technologies have said that rates increase costs or reduce profits. Few people however said that they slowed down the hiring or cancellation of projects.
"You hear cautionary notes, but nothing specific about withdrawals," said Bill Warlick, an analyst at Fitch, the rating agency. Large companies, he said, make big investment decisions years in advance and will be slow to change course.
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