According to the Bureau of Economic Analysis’ final estimate, U.S GDP increased 4.2% in the second quarter, unchanged from the earlier estimate. The fastest pace of growth in almost four years was powered by increases in investment and expenditure across several categories.
The Trump administration’s tax cuts program was the primary force that powered the expansion in the second quarter. Although the economy is expected to fall in the third quarter following tariff-related concerns, it is still on track to meet Trump administration’s annual growth target of 3%. With the domestic economy witnessing expansion, growth mutual funds have emerged as prudent investment options.
Q2 GDP Steady in Final Estimate
The third and final estimate of second-quarter GDP revealed that the U.S. economy expanded at an annualized pace of 4.2% during the period, unchanged from the second estimate released in August. Higher spending and business investment were somewhat offset by a fall in private inventory investment.
The second quarter witnessed the fastest pace of growth since the third quarter of 2014. It also marked a major improvement from 2.2% pace of growth recorded in the first quarter. Overall, the economy grew 3.2% in the first half of 2018, primarily due to the Trump administration’s substantial tax cuts.
Additionally, consumer spending, which accounts for more than two-thirds of all economic activity, increased by 3.8%, as previously estimated. This is the highest increase recorded since 3.9% logged in the fourth quarter of 2017 and the best growth in around four years.
Annual Growth Likely to Hit 3% Target
Another reason for the strong pace of growth in the second quarter was a major front-loading of soybean exports. These shipments were expedited to avoid China’s retaliatory import tariffs and contributed around 1.2% to the headline figure. Moreover, the annualized rate of growth is still expected to clock in at around 3%.
