2nd Quarter GDP Details
- The tax cut helped drive growth.The recent $1.5 trillion tax cut contributed to the latest GDP performance. Both consumers and businesses spent more in the 2nd quarter. Some economists believe this result will not last; without further tax cuts, consumers and companies won’t have additional funds at their disposal. Trade tension affected GDP.
- This year’s ongoing trade drama impacted the economy during the 2nd quarter, but perhaps not the way you might expect. Many soybean farmers tried to get ahead of coming tariffs by shipping their crops to China earlier than normal. This move helped GDP increase between April and June. Inflation slowed.
- When examining inflation, the Fed uses the personal consumption expenditures (PCE) without food and energy, also known as the core PCE. The 2nd quarter reading was 2%, down from 2.2%. Between healthy economic growth and solid inflation numbers, the Fed is likely still on track for two more rate hikes in 2018. Seeing strong growth this late in an economic expansion is good news. However, now we will have to see whether the growth can continue at this rate. When discussing the GDP readings, President Trump predicted even better results in future quarters. Some economists, on the other hand, believe trade wars and consumer spending could provide headwinds.
ECONOMIC CALENDARTuesday: Personal Income and Outlays, Consumer Confidence Wednesday: Motor Vehicle Sales, ADP Employment Report, PMI Manufacturing Index, ISM Mfg Index Thursday: Factory Orders, Jobless Claims Friday: Employment Situation, International Trade, PMI Services Index, ISM Non-Mfg Index
Quote Of The Week
“Let no feeling of discouragement prey upon you, and in the end you are sure to succeed.” – Abraham Lincoln