GDP jumps 4.1% for best pace in nearly four years

The Gross Domestic Product rose at a huge pace of about 4.1 percent in the second quarter of the year 2018. This is actually the best pace since the year 2014 which has lifted the hopes that the economy is ready to break free of its slump for almost a decade. The percentage of growth that occurred matched perfectly with the expectations of the economists that were surveyed by Reuters. The rise in the percentage of the GDP was a result of the increase in spending of the consumer and investment in the business. The futures of the stock market edged quite lower on the news while on the other hand the yields of bonds of the government moved lower.

The rate of growth of the Gross Domestic Product was the fastest since the 4.9 percent growth that took place in the year 2014 and is also the third best rate of growth in the Great Recession. In addition to the strong rate of growth in the second quarter, the Department of Commerce revised the interpretation of first quarter from 2 percent to 2.2 percent. Along with the rise in spending of consumers and investment in businesses, the increase in exports & spending by the government also played a vital role in the jump of the GDP. The expenditures of personal consumption increased by about 4 percent while the investment in business rose by about 7.3 percent and the federal government outlays increased by about 3.5 percent.

At the same time exports increased as well which made farmers rush to get soybeans to the nation of China ahead of the retaliatory tariffs which are set to come into effect in days to come. The decline in the rate of private inventory investment and the residential fixed investment were the main drags, this is what the report said. Both tariffs as well as the massive cut in the rate of taxes were actually the key factors that aided in the growth. Peter Boockvar who is the chief investment officer at Bleakley Advisory Group stated that if the bottom line was not for an upside to inflation, the GDP would have been much better because of the upside in spending boost in the rate of exports and spending by the government which basically offset a sharp decline in inventories and no significant changes in the gross private investment which was really unexpected.

October 16, 2018 - 20:36
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