US Q2 GDP: Real final sales grew at the fastest pace in 12 years - NBF

According to National Bank of Canada’s analyst, Krishen Rangasamy,  US economic growth accelerated sharply in the second quarter and is on track to grow roughly 3% during 2018. 

Key Quotes:

“While the export sector benefited from strong foreign demand, domestic activity was pumped up by fiscal stimulus. Indeed, tax cuts propped up consumer spending and business investment, while increased outlays from government also boosted Q2 growth. So much so that real final sales, i.e. GDP excluding inventories, grew a stunning 5.1% annualized during the second quarter.”

“The only reason Q2 real GDP growth ended up at 4.1% (and not 5.1%) was the drag from inventories.”

“The pace of GDP growth observed during the second quarter is not sustainable over the longer term.”

“The contribution of trade to growth in Q2 was the best since 2013 and is unlikely to be repeated soon given the strength of the U.S. dollar and ramp up of trade barriers.”

“Real consumption growth, at 4% annualized in Q2 (the highest since 2014), will soften as the effects of personal income tax cuts fade.”

“The strong first half of 2018 puts U.S. real GDP on track to grow roughly 3% this year.”