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Trump falsely claims historic turnaround

Trump falsely claims historic turnaround

President Donald Trump, who ahead of Friday's release of the gross domestic product report had promoted the notion that second-quarter growth would be robust, declared victory.

The United States economy grew at its fastest pace since 2014 in the second quarter of the year, up 4.1%, helped by strong business investment, consumer spending and federal government spending, as well as a boost in exports that came in anticipation of retaliatory tariffs.

"We've accomplished an economic turnaround of historic proportions", he said.

President Trump was joined by Vice President Mike Pence, in addition to a number of White House economic officials and Cabinet members during his remarks.

The average annual growth rate has been 2.8% over the past four quarters and is now on track for 3.1% growth in 2018 - a level that has been met with criticism by some economists.

"We're getting explosive growth in the second quarter because of trade", economist Ellen Zentner of Morgan Stanley tells the Times.

TRUMP: "One of the biggest wins in the report, and it is, indeed a big one, is that the trade deficit - very dear to my heart because we've been ripped off by the world - has dropped". "I think you can go to 5 percent or 6 percent".

The numbers were driven by consumers who began spending the tax cuts Trump signed into law previous year and exporters who have been rushing to get their products delivered ahead of retaliatory tariffs.

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Consumer spending rose sharply in the second quarter, after slumping in the first.

Nobody can dispute that the U.S. economy had good growth in the second quarter.

Friday's number nearly guarantees the Federal Reserve will raise interest rates two more times this year - to get to the total of four that had been expected in 2018. Consumer spending grew 4 percent, more than estimated, while nonresidential business investment climbed at a 7.3 percent clip. While that was the strongest performance since the third quarter of 2014, it was not the best since the recession ended in mid-2009.

He said if the economy continues to grow at this rate, it could double in size 10 years faster than it would have under Presidents Barack Obama and George W. Bush.

Council of Economic Advisers Chairman Kevin Hassett on the state of the USA economy and the trade truce with Europe.

The trade truce between the USA and European Union earlier this week doesn't change his view. Apple Inc., for instance, lifted its capital spending to $4.2 billion from $3 billion a year earlier but also spent a record $23.5 billion buying back its stock and another $3.2 billion on dividends. In 2019, he expects solid 2.6 percent growth.

President Trump thinks this is just the beginning.

David Rosenberg, the chief economist of Gluskin Sheff, argues trade disputes may play an even bigger role in inflating GDP.