The latest 2nd quarter (April – June) GDP growth estimates have been revised to show an increase of 3.1% breaking the economic threshold of three percent President Trump established as a growth goal. Economists snarked it would never happen.
However, perhaps even more interesting for CTH readers who have been following MAGAnomic predictions, are the numbers inside the economy and the downstream activity within an economy focused on Main Street instead of Wall Street.
Here’s the presentation from Reuters. I’ve pulled out some paragraphs that specifically relate to earlier discussions on the New Economic Dimension, and possible behavior. It’s happening folks. What we earlier thought might happen is now happening.
WASHINGTON (Reuters) – The U.S. economy grew a bit faster than previously estimated in the second quarter, recording its quickest pace in more than two years, but the momentum probably slowed in the third quarter as Hurricanes Harvey and Irma temporarily curbed activity.
Gross domestic product increased at a 3.1 percent annual rate in the April-June period, the Commerce Department said in its third estimate on Thursday. The upward revision from the 3.0 percent rate of growth reported last month reflected a slightly faster pace of inventory investment.
Remember the predictions for spending patterns and the MAGAnomic impact on prices in a new economy? Trump’s national economic policy disconnects the Fed from being able to influence inflation. Durable goods inventories climb, foreign manufacturers increase productivity, and prices remain low for approximately two years. Simultaneously consumable goods drop in price as Trump trade policy reverses the exfiltration of wealth.
Eventually economic growth, in conjunction with increased demand, starts pushing wages higher. This interim phase leads to less spending on static durable goods and increased spending on lower priced consumable goods and services. Well…
[…] Growth in consumer spending, which makes up more than two-thirds of the U.S. economy, was unrevised at a 3.3 percent rate in the second quarter as an increase in spending on services was offset by a downward revision to durable goods outlays. Consumer spending in the second quarter was the fastest in a year.
Amid robust consumer spending, businesses accumulated a bit more inventory than previously reported to meet the strong demand. Inventory investment added just over one-tenth of a percentage point to GDP growth in the second quarter. It was previously reported to have been neutral.
Remember the predictions for investment flows as Trump fiscal policy benefits Main Street instead of Wall Street? Well…
[…] Growth in business spending on equipment was unchanged at a rate of 8.8 percent, the fastest pace in nearly two years.
Investment on nonresidential structures was revised to show it increasing at a 7.0 percent pace, up from the previously reported 6.2 percent rate.
Both export and import growth were revised slightly lower. Trade contributed two-tenths of a percentage point to GDP growth last quarter.
Investment capital decisions modify behavior based on where the investment class thinks the best return is going to be. We have pointed out that while global investors criticize President Trump, those same people are putting their money on USA Main Street.
The government also sharply revised down growth in corporate profits for the second quarter. Profits after tax with inventory valuation and capital consumption adjustments increased at a 0.1 percent rate instead of the previously reported 0.8 percent pace. (link)
♦The Modern Third Dimension in American Economics – HERE
♦The “Fed” Can’t Figure out the New Economics – HERE
♦The “Fed” is Powerless To Control Inflation – HERE
♦Proof “America-First” has disconnected Main Street from Wall Street – HERE
♦Treasury Secretary Mnuchin begins creating a Parallel Banking System – HERE
♦How Trump Economic Policy is Interacting With The Stock Market – HERE
♦How Multinationals have Exported U.S. Wealth – HERE
♦How 4 or 5% GDP Growth is Entirely NOT Difficult – HERE