The U.S. economy grew at an upgraded annual rate of 3.1 percent in the spring, the fastest pace in more than two years, Newsmax reports. However, the growth is expected to slow sharply this quarter in the wake of a string of devastating hurricanes. When President Donald Trump predicted that his policies would stimulate growth of 3 percent or more, a lot of economists didn’t take him seriously, Newsmax adds.
CNBC reported in August that the goal now seems certainly within reach. “A revision to second-quarter gross domestic product showed a gain of 3 percent, the first period to reach that level since the first quarter of 2015.”
The April-June expansion in the gross domestic product, the economy’s total output of goods and services, is up slightly from a 3 percent estimate made a month ago, the Commerce Department reported Thursday. It is the strongest performance since the economy grew at a 3.2 percent pace in the first quarter of 2015. The upward revision reflected larger farm stockpiles.
The year started with a lackluster 1.2 percent gain in the first quarter, and economists believe growth has slowed again to around 2 percent in the current quarter. The revised figure was the government’s third and final look at GDP for the April-June period, and left GDP rising at an average 2 percent pace over the first six months of the year. That matches the lackluster average annual growth rates seen since the recovery from the Great Recession began in mid-2009.
Analysts have been busy trimming their forecasts for the current July-September quarter to reflect the adverse effects of hurricanes Harvey, Irma and Maria that have hit in recent weeks, but many are optimistic that growth will bounce back quickly as rebuilding gets underway, Newsmax writes.
Gus Faucher, chief economist at PNC, said he had reduced his third-quarter forecast to 2.7 percent, down by 0.5 percentage point. He noted that various readings on the economy from retail sales to auto sales and industrial production have been weaker since the hurricanes hit but he said the declines have so far been moderate.
While some analysts see third-quarter growth slowing to perhaps 1.5 percent, many believe growth will rebound in the final three months of the year to perhaps as high as 3 percent. “By the middle of 2018, the economy will be back to its pre-hurricane path,” Faucher predicted.
Trump also traveled to Indiana on Wednesday to tout the benefits of the tax plan his administration and congressional Republicans unveiled earlier in the day.
“Our country and our economy cannot take off like they should unless we dramatically reform America’s outdated, complex and extremely burdensome tax code,” Trump told the crowd, urging them to lobby Congress to win passage of the first major revamp of the nation’s tax code in a generation, Newsmax adds.