US economic growth slows to 2.1% in April-June 2019

US real gross domestic product (GDP) increased at an annual rate of 2.1 per cent in the second quarter of the current year (April-June 2019), according to the findings of the Department of Commerce’s Bureau of Economic Analysis (BEA), released on Friday.

That is significantly lower than the 3.1 per cent growth rate in the first quarter and falls far short of the 3 per cent target that President Trump has repeatedly promised. 

GDP grew 2.5 per cent for all of 2018, down from the 3 per cent previously reported.

The 2.1 per cent GDP growth rate is not bad considering the weight of the trade dispute with China, the country’s biggest trading partner.

“The Trump economy is growing strong and, on the heels of 3.1 percent growth in the first quarter, is poised to continue expanding,” said Secretary of Commerce Wilbur Ross. “President Trump’s ambitious agenda of deregulation, tax reform, and job creation is making the U.S. the premier place for business, and is restoring our position as an economic leader on the world stage.”

He said the Trump Administration’s policies have delivered repeated wins for American workers. In July, the current economic expansion became the largest in US history – a testament to the strength of President Trump’s business-friendly policies, he added.

In the second quarter, consumer spending, the engine of the US economy, surged at a 4.3 per cent annual rate, as spending on goods rose at the fastest rate since the first quarter of 2006.

The economy beat expectations again in June by adding 224,000 jobs, the last month of the second quarter, and averaging 129,000 jobs added per month over the past year. Since the President’s election, the country has added nearly 5 million jobs, while the manufacturing industry alone has added more than 500,000. The tight labor market benefitted American workers in another way in June as nominal average hourly earnings rose by 3.1 per cent over the previous 12 months, meeting or surpassing 3.0 percent growth for the 11th month in a row. Before 2018, nominal average hourly wage gains had not reached 3.0 percent since 2009.

The larger trend shows that the economy has cooled since last year, when tax cuts and government spending gave growth a temporary jolt. But the strong job market and robust consumer spending are keeping the recovery on track, even as various forces — foreign and domestic — threaten to knock it off course.

Still, on Friday, the S&P 500-stock index and the Nasdaq composite index closed at new highs after the GDP report was released.