The Commerce Department reports that U.S. gross domestic product rose at an annual rate of 4.1 percent in the second quarter, up from 2.2 percent in the first three months of the year. This represents the strongest quarter of growth since 2014.
Two main factors appear to have driven this powerful growth. First, consumer spending rose 4 percent. Second, exports rose 9.3 percent. According to the New York Times, the strong export number was “driven in part by a surge in soybean shipments tied to President Trump’s trade policies.” Apparently, lots of foreigners were buying our soybeans in anticipation of the tariffs China was about to place on them.
Knowing that a great GDP report was coming, the Washington Post — an anti-Trump broadsheet with a sports page and comic strips — preemptively tried to explain it away as “a blip.” According to the Post:
Economists say the spike is coming mainly from a fluke: There was an unusually large increase in exports in the spring that probably came because other countries were trying to buy U.S. goods before Trump’s trade war escalated and tariffs kicked in. Soybeans exports, for example, surged 9,400 percent in the period from March to May over the prior year, Morgan Stanley said. China, a major buyer of U.S. soybeans, put hefty tariffs on the American crop this month in retaliation for Trump’s levies on numerous Chinese products.
The 4.1 percent growth figure may or may not be sustainable. Note, though, that it wasn’t just exports that helped produce it. There was also that rise in consumer spending, presumably attributable to the tax cut. Note, too, that the trade war with the EU is on hold and that the future for soybean exports now seems rosy (elsewhere, the Post, borrowing from Nancy “Crumbs” Pelosi’s play book, writes off this good news as “beans”).
The Times takes a more balanced view than the Post of the good news. It agrees that growth is likely to slow during the remainder of the year, but adds:
[R]ecent data does suggest that the pace of growth has picked up this year. Some economists think full-year growth in gross domestic product could hit 3 percent in 2018 for the first time in the nearly decade-long recovery, a prospect that became more likely following Friday’s strong numbers. . . .
“The bottom line,” says Diane Swonk the chief economist at Grant Thornton, “is that the economy is doing better.” Maybe much better.