Revised data from the Department of Commerce shows a 3% growth in GDP for the second quarter (April-June). This is a serious increase from the measly 1.2% growth we saw during Q1 and is the strongest we’ve seen since the beginning of 2015 when growth hit 3.2%.
It’s also exactly what Trump promised us on the campaign trail.
Data also shows a strong increase in personal consumption, which indicates a widespread feeling of financial security, and an increase in nonresidential fixed investment, which suggests bullishness on the business side. Imports also increased.
These increases were partially offset by major decreases in state and local government spending.
In general, 2-3% growth is considered “robust” and is the target. Anything over 4% is too hot, possibly inflationary and definitely unstable. Below 2% is anemic and 0% or negative is considered a recession. A prolonged recession is a depression.
A single quarter of strong growth doesn’t mean we’ll reach an average of 3% for the entire year, and we can expect damage from Hurricane Harvey to temper growth in Q3.
Trump has promised to hit 4% or better.
Moody’s Analytics economist Mark Zandi predicts a 2.1% average growth for 2017. “For the first time since the Great Recession ended in mid-2009, the economy is not facing any significant headwinds,” says Zandi.
Either way, we’re on track to improve from 2016’s paltry 1.5% average growth.