The U.S. economy grew at a faster rate in the second quarter than it has grown since the first quarter of 2015. On Thursday, the Commerce Department revised the GDP growth rate for the April-June period up 0.1% to 3.1%, citing a faster inventory investment pace than originally estimated. The encouraging number for Q2 brings the total growth for the first half of 2017 to 2.2% and provides strong evidence of positive momentum in the first year of President Trump’s term.
In the first quarter (January-March), the GDP grew by a disappointing 1.2%, but amid growth-minded policies by the Trump administration and some positive movement in consumer confidence, the economy improved by 3.1% (revised up from 3%) in the next quarter. With the first half of the year growing by 2.2%, the economy will need to continue to see the positive momentum from Q2 to reach President Trump’s aggressive 3% growth goal.
Reaching Trump’s goal may prove difficult, however, in light of the impact of Hurricanes Harvey and Irma, which both massively disrupted some industries, including “retail sales, industrial production, homebuilding and home sales,” according to CNBC. The rebuilding process in the impacted regions, on the other hand, may help the economy in the fourth quarter, as well as the first quarter of 2018.
Though Harvey and Irma hurt some industries in August, other positive developments that month may have helped mitigate their impact. The Commerce Department reports that retail and wholesale inventories are way up, while the goods trade deficit shrunk in August.
CNBC notes that despite state unemployment rates climbing slightly because of the hurricanes, “the labor market remains strong”:
Harvey and Irma continue to impact the labor market and are expected to cut into job growth this month. In a third report, the Labor Department said initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 272,000 for the week ended Sept. 23.
Still, the labor market remains strong. Claims have now been below the 300,000 threshold, which is associated with a robust labor market, for 134 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller.
While reaching Trump’s 3% growth goal for the year will be difficult, the overall trajectory of the economy, even with the devastation wreaked by Harvey and Irma, is clearly going in the right direction. As the Trump administration continues to look for ways to lessen the regulatory and tax burdens on industries, Republicans and the president are hashing out the biggest tax overhaul in decades, an important piece of which is the lowering of the corporate income tax to a more internationally competitive 20% from a stifling 35% rate.
(First reported by The Daily Wire) http://www.dailywire.com/news/21667/economy-grew-fastest-rate-2-years-q2-can-we-reach-james-barrett (September 28, 2017)
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