U.S. Growth Hits 4.1%, Fastest Since 2014, in Win for Trump

Bloomberg.com — The U.S. economy accelerated to a 4.1 percent pace in the second quarter, the fastest since 2014, letting President Donald Trump

The annualized rate of gains in the gross domestic product was 4.2. It followed the first-quarter growth rate of 2.2 percent that was revised from 2 percent. Consumer spending grew 4 percent, more than estimated, while nonresidential business investment climbed at a 7.3 percent clip.

Illustrating the volatility of some elements of GDP, net exports contributed 1.06 percentage point to the pace of growth, the most since 2013, partially on a surge in soybean shipments ahead of retaliatory tariffs. Inventories subtracted 1 point, the most since 2014, also on soybean stocks as well as those of drugs and sundries and petroleum and related products.

Nevertheless, the scorecard gives Trump a chance to highlight the success of his policies, including the biggest tax overhaul since the Reagan era, which probably boosted consumer spending and business investment. Yet the risks from tariffs wars and a fading effect from tax cuts are among the reasons analysts see difficulty keeping the economy growing at such a robust pace.

Even so, Federal Reserve Policy makers are expected to continue their gradual pace of interest-rate hikes in the care of the economy from overheating, without moving so fast that they could choke off growth. The dollar and yields on 10-year Treasuries declined after the report, which also showed inflation excluding food and energy. […]