- U.S. Economy Expands on Strong Consumer Spending in Q2
The U.S economy expanded at the fastest rate in almost four years in the second quarter as the surge in consumer spending and farmers rush for soybeans to beat China’s retaliatory tariffs due in early July bolstered economic growth.
The economy grew at 4.1 percent annualized rate in the second quarter, according to the Commerce Department report published on Friday. Making it the best performance since the third quarter of 2014.
First quarter growth was revised upward to 2.2 percent from the 2.0 percent initially reported, another indication of broad-based growth and validation of Federal Reserve two more rate hikes position.
When compared to the 2.8 percent recorded in the second quarter of 2017, the economy grew at a 3.1 percent rate in the first half of 2018. Suggesting the economy is on track to achieve Trump’s target of 3 percent annual growth.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at 4 percent rate in the second quarter.
Spending in the world’s largest economy is being driven by the low tax and strong labour market, that created an average of 215,000 jobs per month in the first half of 2018.
Business spending on equipment which grew at 8.5 percent rate in the first quarter of the year, slowed to 3.9 percent in the second quarter. Experts expect additional moderation due to trade wars hurting business spending outlook.
The U.S. dollar remains largely unchanged following the report, trading at 1.1647 against the Euro. Still above the ascending channel projected two weeks ago.