Economic growth hits 4.1 percent for second quarter, highest for Trump

The U.S. economy expanded at a 4.1 percent rate in the April-to-June quarter, the highest level in nearly four years and the best showing for President TrumpDonald John TrumpGrassley: Dems 'withheld information' on new Kavanaugh allegation Health advocates decry funding transfer over migrant children Groups plan mass walkout in support of Kavanaugh accuser MORE, the Commerce Department said on Friday. 

The gross domestic product (GDP) report was the strongest since the third quarter of 2014, when growth hit a 5.2 percent pace.

ADVERTISEMENT

Trump administration officials said it was a sign that the economy could expand at a 3 percent annual rate for the first time since 2005, when it grew at a 3.3 percent pace. 

The April–June figure, which was expected to come in around 4.2 percent, easily eclipsed the 2.2 percent annual growth during the first three months of the year. 

All eyes were on the GDP report as Trump administration officials fanned the flames ahead of the lofty growth expectations. 

Stock markets were expected to open higher in anticipation of a strong number.  

Trump and congressional Republicans have been touting how their tax reform and regulatory policies would boost growth this year and into the future.

White House economic adviser Larry Kudlow on Thursday promised that the growth number would be "big" and that it would live up to the economic hype.

Trump was slated to deliver comments on the report at 9:30 a.m.

So far, during Trump's tenure, the economic expansion has been largely lackluster.

In his first year in office, the economy posted 2.3 percent growth, which was followed by a slow start to 2018. 

But Kevin Hassett, the chairman of the Council of Economic Advisers, told Republicans on Capitol Hill on Wednesday that the days of sluggish growth were over.

Hassett said that the second quarter figure would probably be strong enough to push the economy over the elusive 3 percent rate of growth for the year. 

Republicans hope to be able to ride a wave of solid economic news into the November midterm elections. 

During the Obama administration, there were eight quarters of growth of at least 3 percent or higher, including three of 4 percent or better. The highest quarter of growth during his presidency came in the July–September quarter of 2014, when growth hit 5.2 percent.

In the years following the Great Recession, which started in December 2007 under President George W. Bush and escalated into a near economic collapse in September 2008, the economy has failed to reach the 3 percent level for a full year. 

The closest the economy could get was 2.9 percent in 2015.

Consumer spending rose 4 percent, which was better than expected.

Exports increased 9.3 percent from a surge in sales of soybeans, which is likely temporary because soybean growers were trying to stay ahead of tit-for-tat tariffs kicking in between the U.S. and China amid a growing trade war.

While Republicans tout the tax and regulatory cuts as positives for the economy, some economists argue their effects will only provide a temporary surge to the nation's economy because the $1.5 trillion tax-cut package is driving up deficits.

Projections are that the deficit for fiscal 2018 will rise to $890 billion and exceed $1 trillion in 2019, according to the White House Office of Management and Budget. 

And Trump is facing heavy criticism from U.S. businesses who argue his slew of tariffs on long-time trading partners is hurting their ability to ship their exports overseas and will wipe out any gains from the Republican tax bill and the slashing of regulations. 

The president has repeatedly tweeted that the economy is the strongest it has been in years while defending his trade policies he says will eventually produce benefits for U.S. exporters. 

Trump vowed during his run for the White House that his policies would generate growth of at least 4 percent.

“Our Country is doing GREAT. Best financial numbers on the Planet. Great to have USA WINNING AGAIN!” he tweeted this week.

Updated at 9 a.m.