How China's tariffs on soybeans fueled the US GDP bump

How China's tariffs on soybeans fueled the US GDP bump

How China's tariffs on soybeans fueled the US GDP bump

President Donald Trump on Friday (Jul 27) hailed roaring U.S. economic growth as a "miracle", and said the quickest expansion in nearly four years was a vindication of his economic agenda.

"We have accomplished an economic turnaround of historic proportions", Trump told reporters. "We've turned it all around".

The figures released on Friday by the US Department of Commerce showed the economy grew at the fastest pace since 2014 during from April to June. And the report's revisions of 2017 economic data suggest that American households saved significantly more last year than previously believed - a finding that suggests elevated rates of consumer spending could prove sustainable in the medium term.

His jubilation did not extend to Wall Street, where stocks closed down markedly as investors feared the economy has peaked and amid disappointing earnings and trade war fears.

"That's a tremendous drop", the president said.

Trump is predicting that as he renegotiates trade deals, "we're going to go a lot higher than these numbers". Most analysts are forecasting that growth this year could reach 3 percent, which would be the best since a 3.5 percent gain in 2005. "This isn't a one-time shot". "America is being respected again and America is winning again because we are finally putting America first".

While the President most likely hopes the numbers will give the GOP a boost in the midterms, MacGuineas points out that she doesn't think the positive indicators will last that long.

"It's a stretch to get it to 3.0", said Chris Rupkey, chief financial economist at MUFC Union Bank NA in NY.

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Consumer spending grew 4 percent, more than expected, while nonresidential business investment climbed at a pace of 7.3 percent. Note, too, that the trade war with the European Union 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").

"We had an audience of steel workers, some of the roughest, toughest people you've ever seen, and half of them had tears coming down their faces", Trump said Friday.

Most economists caution this is likely to be a one-off growth spurt and not a new sustained trend. He said somebody had predicted 5.3% growth, which he didn't think would happen, but he'd be happy with anything over around 3.7%.

He said the GDP numbers also underscored the urgent need for the job-training programs that the administration is pushing.

Soybeans are a weak spot in President Donald Trump's trade war with China as the country has imposed retaliatory tariffs to hit his voter base - American farmers.

During Barack Obama's presidency, there were four quarters when annualized growth exceeded the level that Trump praised on Friday.

"These rates of growth are higher than average for the post-2009 recovery, but hardly remarkable", he said in a blog post. He campaigned on a platform of tax cuts for businesses and individuals, as well as deregulation.

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