GDP numbers climbing and consistent with the President’s goals for US Economy… But is it enough?

The Commerce Department has released their revised GDP estimates for Q2 (April-June) and if the year ended today, this faster-than-forecasted growth in America would have hit the ambitious GDP growth goal set by President Donald J Trump of 3 percent for 2017. Coming after a strong Q1 which saw the U.S. reaching two-year highs, GDP has surpassed previous Department estimates for Q2 of 2.6 percent. Economists polled by Reuters predicted growth of 2.7 percent.

At its halfway point, American GDP is up 2.1 percent which indicates two-tenths of a percentage point improvement from previous estimates. While the President’s goal was widely dependent on both tax and healthcare reforms, along with deregulation and infrastructure, his impeccable knack to rub people the wrong way has helped create a climate in Washington that is antithetical to progress.

Despite this, business and consumer confidence has remained relatively unaffected by the continuous partisan politicking. Stock market faith is still up and many investor’s ultimately see the President as a man on the side of business, not the government. Ironically, housing and investment in residential are experiencing some of the worst numbers in nearly seven years. Housing fell 6.5 percent but improved from their 6.8 estimates, as investment in non-residential increased from previous estimates 4.9 to 6.2 percent.

Measuring inflation, the Personal Consumption Expenditures (PCE) price index increased nine-tenths of a percentage point and the Gross Domestic Purchases price index has increased at an almost identical eight-tenths. Consumer spending is up 3.3 percent revised from its previous 2.8 percent and accounted for a bulk of the growth, whereas savings went down from 3.7 from 3.9 percent. Trade added two-thirds of a percentage point.

Retail Sales and Business spending increases as our economy continues its shift toward a service economy and increasing B2B companies creating an proliferation of business services for the rising number of entrepreneurs and small businesses entering the market since the recession. Business carried most of the economy in the second quarter and equipment accounted for 8.8 percent.

Some believe, due to strong growth and labor market nearing full employment, that the Fed may be eyeing its 4.2 trillion of treasury bonds and mortgage-backed securities by increasing interest rates in December.

Growth estimates for Q3 are being projected as high as 3.4 percent and seems to be starting off on the right foot. Hiring by private employers has gone up in August to 237,000 new jobs — up from 201,000 in July. Contrary to current optimistic projections, Morgan Stanley believes the third quarter will not be quite as impressive. “Better than expected 2Q GDP results imply a bit less sequential growth in 3Q GDP.” Said Morgan Stanley economists Robert Rosener, Michael Dilmanian and Ellen Zenter via research notes.

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