Trump hails growth as one-offs and consumers boost economy

ll earlier this week predicted that growth will slow notably from here.

"The spring quarter could be the high water mark for growth," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. "That said, there is every reason to expect that growth in the second half of the year will still be in the 3 percent range."

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 4.0 percent rate in the second quarter. That was the fastest in 3-1/2 years and followed the January-March period`s stall-speed pace of 0.5 percent.

Households bought motor vehicles and spent more on health care, utilities, food and accommodation in the last quarter.

Consumer spending is also being driven by a robust labour market, which created an average of 215,000 jobs per month in the first half of this year.

The front-loading of deliveries of soybeans and other goods boosted exports in the second quarter, which grew at their quickest pace in 4-1/2 years, sharply narrowing the trade deficit. Trade added 1.06 percentage points GDP growth in the second quarter after being neutral in the January-March period.

The rush to offload soybeans, however, depleted farm inventories. Inventories declined at a $27.9 billion rate after rising at a $30.3 billion pace in the first quarter. They subtracted 1.0 percentage point from GDP growth.

Business spending on equipment slowed and a further moderation is likely, with trade wars casting a pall on the business spending outlook.

General Motors Co , Ford Motor Co and Fiat Chrysler Automobiles NV on Wednesday cut their full-year profit forecasts, citing higher steel and aluminium costs.

Harley-Davidson Inc has warned that more expensive steel and aluminium and a 25 percent retaliatory duty imposed by the European Union on shipments from the United States could cost the motorcycle maker $45 million to $55 million this year.

Investment in homebuilding fell for a second straight quarter. Government spending grew solidly, boosted by defence outlays.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)