President Donald Trump Friday celebrated the release of new economic data, claiming the U.S. is now the “economic envy of the entire world.”
Trump was responding to new growth numbers announced today that show the US economy surged in the April-June quarter to an annual growth rate of 4.1 per cent – the fastest pace since 2014.
“We’ve accomplished an economic turnaround of historic proportions,” Trump told reporters during hastily arranged remarks on the South Lawn of the White House, where he was joined by Vice President Mike Pence and flanked by members of his economic team.
“Once again, we are the economic envy of the entire world,” Trump said, adding that “America is being respected again.” The numbers were driven by consumers who began spending the tax cuts Trump signed into law last year and exporters who have been rushing to get their products delivered ahead of retaliatory tariffs.
Trump, who has repeatedly attacked the economic record of his predecessor’s administration, pledged during the 2016 campaign to double growth to 4 per cent or better. And he has been trying to highlight economic gains ahead of the mid-term elections.
But Trump, ever the salesman, predicted even higher growth as he renegotiates the nation’s trade deals, saying, “We’re going to go a lot higher than these numbers.” And he insisted the economic numbers are “very sustainable” and not “a one-time shot.”
Private forecasters cautioned that the April-June pace is unsustainable because, they say, it stems from temporary factors, including a rush by exporters of soybeans and other products to get their shipments out before retaliatory tariffs took effect.
They predicted the rest of the year is likely to see solid, but slower growth of around 3 per cent.
The transformation is also not as dramatic as Trump claims – and in many ways the 4.1 per cent annualised growth during the second quarter is in line with an economic expansion that just entered its tenth year.
During Barack Obama’s presidency, there were four quarters when annualised growth exceeded the level that Trump praised today. And in 2015, full-year economic growth nearly reached the 3 per cent level being targeted by the Trump administration this year when it hit 2.9 per cent.
Unlike in 2015, growth has accelerated this year, in part, because of the stimulus from Trump’s deficit-funded tax cuts. Trump has said he sees annual growth of 3 per cent or more as sustainable. But Federal Reserve officials and outside economists don’t expect a permanent upshift. Their forecasts predict that growth will return to roughly 2 per cent, which largely reflects a demographic change beyond the White House’s control.
Due to declines in birth rates, workers will be joining the economy at a slower pace and this hurts overall growth levels.