WASHINGTON — President Donald Trump celebrated the release of new economic data on Friday, claiming the U.S. is now the “economic envy of the entire world.”
The president was responding to new growth numbers announced on Friday that show the U.S. economy surged in the April-June quarter to an annual growth rate of 4.1 percent — the fastest pace since 2014.
“We’ve accomplished an economic turnaround of historic proportions,” Trump told reporters during hastily arranged remarks on the South Lawn of the White House, where he was joined by Vice President Mike Pence and flanked by members of his economic team.
“Once again, we are the economic envy of the entire world,” Trump said, adding that “America is being respected again.”
Tax Cuts and Tariff Effects
The numbers were driven by consumers who began spending the tax cuts Trump signed into law last year and exporters who have been rushing to get their products delivered ahead of retaliatory tariffs.
Trump, who has repeatedly attacked the economic record of his predecessor’s administration, pledged during the 2016 campaign to double growth to 4 percent or better. And he has been trying to highlight economic gains ahead of the midterm elections.
Private forecasters cautioned that the April-June pace is unsustainable because, they say, it stems from temporary factors, including a rush by exporters of soybeans and other products to get their shipments out before retaliatory tariffs took effect.
10th Year of Expansion
They predicted the rest of the year is likely to see solid, but slower growth of around 3 percent.
The transformation is also not as dramatic as Trump claims — and in many ways the 4.1 percent annualized growth during the second quarter is in line with an economic expansion that just entered its tenth year.
During Barack Obama’s presidency, there were four quarters when annualized growth exceeded the level that Trump praised on Friday. And in 2015, full-year economic growth nearly reached the 3 percent level being targeted by the Trump administration this year when it hit 2.9 percent.
Unlike in 2015, growth has accelerated this year, in part, because of the stimulus from Trump’s deficit-funded tax cuts. Trump has said he sees annual growth of 3 percent or more as sustainable. But Federal Reserve officials and outside economists don’t expect a permanent upshift. Their forecasts predict that growth will return to roughly 2 percent, which largely reflects a demographic change beyond the White House’s control.
Due to declines in birth rates, workers will be joining the economy at a slower pace and this hurts overall growth levels.