The Bureau of Economic Analysis showed that the U.S. economy expanded greater than they had predicted for the second quarter. GDP increased at 3.8% which was predicted to be 3.3% for the second quarter. This is largely driven by an increase in consumer spending. The tariffs that have been implemented have boosted domestic demand and a reduction in imports. Imports saw a major drop, which is the reason for a domestic demand increase. In the third quarter, it is being predicted that there could be growth from trades.
While the gain follows a 0.6% contraction in the first quarter, many analysts stay to still be cautious with investments given the trade volatility. The cooling of the labor market is another risk that could affect the future GDP. Many believe that a soft landing is still possible, given the cut in interest rates, but it all depends on the inflation rate.
I wonder how economists view this increase in GDP as on one side it seems positive simply on the basis of growth, but on another side it may be lacking overall efficiency and sustainability. Will this growth be able to be continued for an extended period or is this just a short term solution?
ReplyDeleteWith the possibility of no jobs data being published by the BLS before the Fed boards two day meeting in October, I wonder if the Fed may vote to hold and wait for clearer data before makinga ny more interest rate decisions.
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