These accelerated purchases mean faster growth now at the expense of slower growth later.
The acceleration in real GDP growth in the second quarter reflected accelerations in PCE and in exports, a smaller decrease in residential fixed investment, and accelerations in federal government spending and in state and local spending, the BEA said in its release Friday.
According to the mainstream media, a majority of economists are predicting that the 4.1% growth rate was just a blip so that in the third and fourth quarters of 2018, the growth rate will fall below 3%.
They predicted the rest of the year is likely to see solid, but slower growth of around 3 percent.
Economists also believed that the USA economic growth is likely to slow down in the second half of the year as the fiscal stimulus gradually fades and the Federal Reserve further increases interest rates.
"People are happy. People in general feel a little bit wealthier", he said.
The second quarter acceleration came in part after the injection of stimulus and Republican tax cuts.
His large package of tax cuts has boosted growth.
But Lavorgna adds that after that high water mark three years ago, growth quickly decelerated.
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But most economists say such a strong growth rate is unlikely to last.
The GDP report is due Friday from the US Commerce Department. Trump won largely by appealing to workers struggling in the economy who felt the political powers weren't listening to them. A 3% handle would be "OK", he added. That's above the 130 percent that the market has traditionally traded around and what many think indicates stocks are fully valued.
"Over the last 12 months, the economy has grown by 2.8 percent, which is a bit better than it has done recently, but is in no way the strongest growth during this expansion", said Paul Ashworth, chief USA economist at Capital Economics. And the president expects the strong growth to continue in the third quarter (July-September). I continued to forecast that for the entire year, GDP growth would exceed 4%.
Josh Bivens, an analyst for the Economic Policy Institute, said the second-quarter growth level has been reached or exceeded four other times since the recovery began in 2009.
Housing remained a weak spot in the economy amid signs that the sector is poised for its broadest slowdown in years. Many economists believe that the high growth rate this quarter was indeed a blip. There was also a front-loading of exports of other goods in the second quarter.
Also if China buys less soybeans from the USA they will buy more from Brazil, meaning Brazil may not have enough to sell to their existing customers. "Everywhere we look, we're seeing the effects of the American economic miracle". Now, the growth rate is around seven percent.
Columnist John Fund cites Dan Clifton of Strategas Research Partners, who, relying on Congressional Budget Office estimates, has calculated that the tax cut has already paid for about 30 percent of its static revenue losses. It puts the long-run rate at 1.8 per cent.
Vittert also weighed in on the issue of Trump's tariffs. That's good news, but the looming consequences of Donald Trump's tariffs mean it likely won't last. The Mexican president recently announced that he wants to re-negotiate NAFTA quickly.