As you may have heard this morning, GDP jumped this morning from 2.2% in the first quarter of this year to 4.1% in the second quarter. And that has Rick Santelli pretty excited as he explains what this means:
Here’s more on the GDP from CNBC:
Gross domestic product grew at a solid 4.1 percent pace in the second quarter, its best pace since 2014, boosting hopes that the economy is ready to break out of its decade-long slumber.
The number matched expectations from economists surveyed by Reuters and was boosted by a surge in consumer spending and business investment. Stock market futures edged lower on the news while government bond yields moved lower.
That’s the fastest rate of the growth since the 4.9 percent in the third quarter of 2014 and the third-best growth rate since the Great Recession. In addition to the strong second quarter, the Commerce Department revised its first-quarter reading up from 2 percent to 2.2 percent.
In addition to the rise in consumer and business spending, increases in exports and government spending also helped. Personal consumption expenditures rose 4 percent while business investment grew 7.3 percent while federal government outlays increased by 3.5 percent.
Exports rose in part as farmers rushed to get soybeans to China ahead of expected retaliatory tariffs to take effect in the coming days. Declines in private inventory investment and residential fixed investment were the main drags, the report said.
The tariffs as well as last year’s massive tax cut both were key factors in the growth.
Trump has just weighed in this morning on the new GDP numbers:
“We are now on track to reach GDP annual growth of over 3%… Each point, by the way, means approximately $3 trillion and 10 million jobs,” @POTUS says https://t.co/NKlCbnD8JA pic.twitter.com/rCianpN9yU
— CBS News (@CBSNews) July 27, 2018
My only concern is what Trump’s trade war is going to do to these numbers. Clearly the rush to beat the trade war had some impact on the numbers today, which would mean the reverse should be true for Q3, slowing down the GDP.
We’ll have to wait and see, but I would expect that in Q3 the GDP will drop back down a little bit. And then the question becomes how long will Trump want to keep it going with counties unwilling to make deals, knowing that it’s taking away from all the ‘winning’ he wants to do.