The U.S. Commerce Department said on Wednesday that the U.S. economy had expanded by 3% in the second quarter (April-June) of the year. It’s not only better than the previous estimate, 2.6%, but also a substantial boost from the first quarter’s 1.2%.
“The acceleration in real GDP in the second quarter primarily reflected upturns in private inventory investment and federal government spending and an acceleration in PCE that were partly offset by downturns in residential fixed investment and state and local government spending and a deceleration in exports,” according to the report. To sum up, consumer spending is basically the backbone of the second quarter GDP growth.
President Trump commented on the growth that he thinks the economy will “go much higher than 3 percent.” Economists and the media, however, are not too optimistic about future growth. In an analysis, the New York Times straight-out called it a “Sisyphean challenge”:
“There are several reasons that his goal is probably far-fetched, namely the country’s aging work force and slower population growth than in the past. Combine that with low productivity growth, and hitting Mr. Trump’s target begins to look like a Sisyphean challenge.”
The impact of Hurricane Harvey is minor, according to a CNBC analysis.
President Trump said on Wednesday, “on a yearly basis, as you know, the last administration during an eight-year period never hit 3%. So we’re really on our way.”
However, he is incorrectly comparing a quarterly growth to an annual growth. In this handy chart by Fortune, we can see clearly that quarterly growth during Obama exceeded 3% eight times.