The U.S. gross domestic product increased at an annual rate of 4.1 percent for the second quarter of 2018, the federal government reported. This is the fastest level of growth since 2014.
President Donald Trump's economic adviser, Larry Kudlow, promised Friday that “this is a boom that will be sustainable, frankly, as far as the eye can see.”
What are the details?
On Friday, the Bureau of Economic Analysis, which is part of the U.S. Department of Commerce, released its estimates for the U.S. gross domestic product for the second quarter of 2018. These numbers will be revised Aug. 29 based on more complete data.
Consumer spending rose 4 percent during this quarter. Overall GDP was also boosted by a 3.5 percent increase in government spending.
Personal income, disposable income, and personal savings all increased this quarter as well, although at a slower rate than last quarter.
However, economists point out that some American companies increased exports during this past quarter to beat the implementation of the Trump administration's tariffs or retaliatory tariffs that other nations have employed as retribution for Trump's tariffs.
For example, U.S. soybean exports were up 50 percent in May compared to the same month in 2017, due to U.S. soybean exporters trying to beat retaliatory tariffs that China imposed on the product in response to Trump administration tariffs on steel and aluminum. These tariffs have caused soybean prices to plummet.
“We’re getting explosive growth in the second quarter because of trade,” Ellen Zentner, chief United States economist for Morgan Stanley told the New York Times. “You’ve got a big hole on the other side of that.”
On Wednesday, Trump announced that European Commission President Jean-Claude Juncker had agreed to increase the amount of soybeans purchased by the European Union, a potential lifeline for soybean growers. It is not clear at this point when this would be implemented or how much this would offset the impact of the Chinese tariffs.
In a speech on Friday, Trump credited the tariffs with being responsible for the economic growth.
“The steel industry is back. They're open for business. And the tariffs did it,” he said in a Rose Garden address.
However, rising costs of steel have impacted other industries from washing machine manufacturers to farmers who need equipment.
The increased GDP could also mean that the Federal Reserve will decide to raise interest rates again. The Federal Reserve periodically raises interest rates during times of economic growth in order to combat inflation.
The GDP numbers are good news for President Trump who commented on what he thought the numbers would be before they were released, something presidents have traditionally refrained from doing.
On Thursday, Trump correctly predicted that growth would hit at least 4 percent.
"Somebody actually predicted today 5.3," he said. "I don’t think that’s going to happen. 5.3. If it has a 4 in front of it, we’re happy. If it has like a 3, but it’s a 3.8, 3.9, 3.7, we’re OK."
Trump went on to say, "These are unthinkable numbers. If I would have used these numbers during the campaign, the fake news back there would’ve said he’s exaggerating."
This GDP estimate is also good news for Republican candidates up for election this year, who have tied their candidacies to economic improvements promised by Trump. The third quarter GDP results won't come out until Oct. 26, just 11 days before Election Day.