Tariffs

GDP Growth Is Good News—But Can It Continue During a Trade War?

The nation's GDP rose 4.1 percent in the second quarter, but those good numbers aren't likely to last.

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Tinnaporn Sathapornnanont/Dreamstime.com

The Commerce Department's Bureau of Economic Analysis says the nation's real gross domestic product grew 4.1 percent in the second quarter of 2018. That's good news, but the looming consequences of Donald Trump's tariffs mean it likely won't last.

The GDP numbers, released today, show an improvement over the first quarter's 2.2 percent growth. It's the first time the economy has grown more than 4 percent in a quarter since 2014.

It wasn't all sunshine and roses: Residential investment fell for the fourth time in five quarters, meaning that people are putting less money into home construction. But for the most part, the GDP report suggest a strong economy, with consumer spending going up 4 percent and business investment rising 7.3 percent. "The bottom line is that the economy is doing better," Diane Swonk, chief economist for the accounting firm Grant Thornton, tells The New York Times.

President Trump thinks this is just the beginning. "We're on track to hit the highest annual growth rate in over 13 years," he said after the numbers were released. "And I will say this right now and I will say it strongly, as the deals come in one by one, we're going to go a lot higher than these numbers, and these are great numbers."

But as the nonpartisan Committee for a Responsible Federal Budget explains,

Many analysts believe the second-quarter growth numbers are artificially inflated by shifts in consumption to avoid the new tariffs announced this quarter. Most significantly, China appears to have accelerated purchases of soybeans, crude oil, and other exports before new tariffs went into effect. Pantheon Macroeconomics estimated the soybean surge alone could account for as much 0.6 percentage points of the growth rate. These accelerated purchases mean faster growth now at the expense of slower growth later.

In other words, foreign companies appear to be importing as many goods as they can from the U.S. before their own governments retaliate against Trump's tariffs with duties of their own. Once those tariffs are in place, American goods won't be in such high demand, which will hurt future GDP growth.

"We're getting explosive growth in the second quarter because of trade," economist Ellen Zentner of Morgan Stanley tells the Times. "You've got a big hole on the other side of that."

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  1. GDP Growth Is Good News?But Can It Continue During a Trade War?

    Short version – Yes.

    1. Short version – Yes.

      TRUE version — Great Depression, ever hear of it?

      1. …so a stock market speculation bubble fueled by easy credit and ignoring the underlying problems (most notably the fact that the Dust Bowl was actually beginning in the mid-1920s) was created by tariffs?

        Child, learn some history before you attempt to speak with your elders.

      2. Trade war averted! Europeans capitulate! Tough negotiator Trump victorious! TDS sufferers heads explode! MAGA!!

        1. It was Trump that caved. And the Senate openly defied him yesterday on tariffs.
          Which party runs the Senate?

          1. The Globalist Uniparty

            1. (lol) Same party as Trump and they openly defied him. Again.

      3. Michael Hihn|7.27.18 @ 3:36PM|#

        Short version – Yes.

        TRUE version — Great Depression, ever hear of it?”

        Facts are not in evidence when Mike posts his bullshit.
        Fuck off, Mike, and quit making an ass of yourself.

    2. 🙂

      1. Short version – Yes as long as the Trade War is mild.

        The Pew Research Center wrote about the average tariff is different countries. It said:

        In 2016, according to the World Bank, the average applied U.S. tariff across all products was 1.61%; that was about the same as the average rate of 1.6% for the 28-nation EU, and not much higher than Japan’s 1.35%. Among other major U.S. trading partners, Canada’s average applied tariff rate was 0.85%, China’s was 3.54% and Mexico’s was 4.36%.

        World Bank data on GDP growth show positive GDP growth for China all of this century and positive GDP growth for Mexico for most of this century even though Mexico and China have tariffs that are more than twice the USA tariffs. Although the trade war saddens me a bit, there is no need to panic. Our tariffs are so low to start with that we can raise them significantly and still be with the range of other countries with growing economies. No one accuses the leaders of countries that already have high tariffs of being the new Hitler on account of their trade policies, because they don’t want to sound racist.

        1. That’s not how tariffs are compared, in this context, because it distorts what total free trade would cause,

          Instead of dividing tariff dollars on a country, with ALL imports from that country, which Pew did, compare actual tariffs. Our average 3.5%. Our primary trading partners have tariffs ranging (mostly) from 10% to 40%, averaging 20%.

          So Trump has fucked up agan. Free trade would lower OUR prices by an average of 20% in other countries, but their prices would go down only 3.5% here. Do the math.

          Yet another deal Trump will fail to make. His bullying and bluster does not work in the big leagues.
          And his base is about as dumb as Bernie’s and Elizabeth’s.

          Even more true today: Left – Right = Zero

  2. It’s a journalist’s job to find a dark cloud for every silver lining.

    1. Now it is. Yes

      1. This story, and some of the others posted over the previous days, convinces me that Reason’s reporting on trade issues is slowly becoming as factual, rational, and objective as their stories on immigration.

        When Shikha posts a column conflating high tariffs with xenophobia, then you will know they have reached that point.

        1. Libertarianism. Deal with it.

          Since over 60% of Americans self-describe as libertarian, vs 25% as Republican … your time has expired.
          Fairy tales do NOT come true.

          1. As much as I wish your numbers were true, they aren’t.

            Libertarians weren’t even kingmakers in the last election, let alone contenders – in an election where public disdain for the major parties and the candidates in particular was very high. But while we’re on numbers, here’s a couple for you –

            Number of Libertarians in the House – 1-3 depending on how strictly you apply the purity test, none from the LP.

            Number in the Senate – 0-1, depending on how rigidly you apply the purity test, none from the LP.

            That’s right, Libertarians are outnumbered by Democratic Socialists in the US Congress.

            1. As much as I wish your numbers were true, they aren’t.

              You don’t know what a libertarian is! That’s from a survey, commissioned by Cato and conducted by a top profesional pollster.

              And this is why you failed,

              Number of Libertarians in the House – 1-3 depending on how strictly you apply the purity test, none from the LP.

              The LP has nothing to do with this. There are 0 libertarians in the House,
              And your “purity test” has destroyed the movement, also per Cato

              “In our Zogby survey we found that only 9 percent of voters with libertarian views identify themselves that way.” -David Boaz and David Kirby (page search for the words)

              Do the math. The libertarian label is rejected by 91% of libertarians

              That means a severe divide between libertarian values and libertarian ideology … largely because a “libertarian” society is the exact opposite of a FREE society.

              “Libertopia” is like Galt’s Gulch, which even Ayn Rand said would never work for an entire society, It was a community of like minded people.

              If you believe a free society is for libertarians only … that is a cult, not a movement,
              In a free society, libertarians would be only one of many communities, all voluntary,

              Cont’d

              1. Cont’d

                In a free society, Galt’s Gulch exists right next to a Marxist commune ? lesbians up the street from a community of Christian Fundies ?. retired Catholic priests across the field from Wiccans. Each community would be voluntarily, some quite small. And Liberty would be a Voltaire staue. inscribed: “I disagree with what you say, but I will fight to the death for your right to say it.”

                Liberty is a mutual benefit society.
                Not a members only Country Club.

                Anything else?

                1. an election where public disdain for the major parties and the candidates in particular was very high.

                  MORE proof of WHY the libertarian movement is soundly rejected … since it was captured by the same anti-gummint gooberism that’s destroying the GOP. (versus pto-liberty)

                  The LP had THE most qualified candidates … but NO POLICY SOLUTIONS … when Americans were (and are) open to even radical change, The entire libertarian establishment has NO policy solutions … for ANYTHING ,… the doctrine of Rothbardian dumbfucks, who say that even seeking public office is a lust for power, conspiring with statists … it’s from them that we get the intellectual bankruptcy that elections are for “promoting libertarian ideas” (slogans and soundbites)

                  A free society will appear … spontaneously …. like weeds erupting from the soil! (lol)
                  THEY are the massive failure of the 2016 Presidency.

                  Trump’s MAGA was the ONLY promise of hope …. like Reagan’s “Shining City on a Hill” … and it was Reagan Democrats who put him in the White House (blue-collar whites, because the libertarian establishment is now so totally useless)

                    1. Not YOU. Were you giggling?

          2. Since over 60% of Americans self-describe as libertarian, vs 25% as Republican

            Explains the massive success Libertarians have electorally.

            1. Since over 60% of Americans self-describe as libertarian, vs 25% as Republican

              Explains the massive success Libertarians have electorally.

              Umm, you’ve confused libertarian with Libertarian. Over 60% of Americans would self-identify as “fiscally conservative and socially liberal” Where does that leave you?

              The libertarian LABEL is rejected by 91% of libertarians,. which means a growing majority of Americans accept libertarian values, but reject libertarian ideology. Per a top independent pollster

              Repeat: Your time has expired

              Anything else?

  3. It wasn’t all sunshine and roses: Residential investment fell for the fourth time in five quarters, meaning that people are putting less money into home construction.

    The tariffs on steel and the tight market for construction workers might be a factor. The elimination of real estate tax deductions could also influence this trend.

    1. Actually, it’s wood tariffs on Canada that is a much bigger factor for home construction, combined with rising interest rates.

      The mortgage interest deduction was reduced from $1M to $750k, not a huge change and I welcome it. Make the limit lower! But, the deduction for real estate companies would more than make up for it. I’m curious how it will affect multi-family and the rental market in general.

  4. We interrupt Trumptard propaganda with the actual facts. Documented.

    It’s the first time the economy has grown more than 4 percent in a quarter since 2014.

    When it grew MUCH faster, 5.1% and 4.9% (2nd and 3rd quarters, 2014)

    Still well below Obama’s second term. And hardly impressive, since Trump inherited the longest recovery EVER by a President, 7-1/2 years, versus Obama inheriting the 2nd worst recession ever. Clinton took office in the 22nd month of an expansion, and left a recession (5 weeks into Dubya’s first term) http://www.nber.org/cycles.html

    (Compare with Obama’s 2nd term because no major recession, apples and apples)

    But Trumptard’s will scurry like cockroaches, claiming a major success, on yet another topic they clearly know nothing about.

    “But we BELEEB!” Proof linked.

    (yawn)

  5. Obama should still get credit for any good economic news. Putin’s Puppet has been terrible for the economy, but fortunately he hasn’t completely destroyed it yet.

    However, if Drumpf remains in office too much longer and continues his draconian, white nationalist immigration crackdown, the economy might never recover.

  6. “Residential investment fell for the fourth time in five quarters, meaning that people are putting less money into home construction.”

    After 2008, a lot of houses ended up vacant for various reasons, and mortgage companies were in no hurry to sell them. (Because they had to mark them down to market as they sold, and if they did that with too many houses in a short while, they’d fall under statutory equity floors, and be legally obligated to close up shop.)

    Vacant houses decay. A lot of US housing stock was destroyed over the last 10 years. I saw that first hand house hunting a few years back; It was terrifying how many houses would look good in old listing photos, but when you got there, they’d been vandalized, or a broken pipe had flooded them, or a leaky roof had mushrooms growing in the living room.

    I would speculate that all that has happened, is that the lost housing stock has now been replaced, and building rates are back down to maintenance levels.

    1. Largely irrelevant. The houses in decay are in different locations than where housing is in demand.
      A combination of Canadian lumber tariffs and rising interest rates are killing the homebuilders.

      1. Housing is stupid expensive and has been for awhile. This is not new.

  7. So far as I can see, we have been in a Trade War with much of Europe since the founding of the EU, and possibly since the creation of the Common Market. And with China since we started doing business with them after Nixon’s trip. All that Trump is doing is fight back on much the same terms are we are being fought. And it seems to be getting results.

    In any case, since others have been wilding Tariffs against us during long economic booms, the answer would seem to be “Yes”.

  8. GDP is not the perfect indicator of economic growth but even it will go up each year as the shackles of government over-regulation are swept aside by Trump and his few supporters in Congress.

    1. So why is Obama’s GDP growth greater than Trump’s? When Trump inherited the longest expansion EVER by a President, and Obama inherited the 2nd worst since the Great Depression? Hello? Hello?

      For apples and apples, compare with Obama’s second term. For the 2014 comparison, this 2nd quarter’s 4.1% is WELL below 4.9% (2Q – 2014). 2014’s 3Q had 5.1%.

      Links to official data are elsewhere in ths page. And Trump himself told us to never believe a word you say — that you’d lie to defend him of even murder, with witnesses.

      Trump still lags Obama on jobs creation, per … ummm … Fox News

      2017: 171,000
      ?2016: 187,000
      ?2015: 226,000
      ?2014: 250,000
      ?2013: 192,000
      ?2012: 179,000
      ?2011: 174,000
      ?2010: 88,000

      No, i am NOT defending Obama. Defending EITHER President is for the shrinking minority of partisan hacks.

      Left – Right = Zero

      1. So about that falloff starting in 2014… Much bigger “losses” 14-15, and 15-16. What did Obama do wrong?

        And what about Labfor? Barry decline from 66% to 63%, the largest decline of any post-war administration. Impressive.

        EMRATIO? Fell off a cliff in 2008/9 and didn’t start recovering until 2014. Exceptional management.

        1. I’m not sure how that’s relevant.

          Your own link PROVES you wrong, for Civilian Employment-Population Ratio. It recovered in 2010, NOT 2014, in the exact month the recession ended (one main reason it DID end then). The upward slope is almost totally constant from mid-2010 onward.

          Labor Force Participation has not budged under Trump. He inherited 62.7%, now 62.9% — the same as Obama’s high in 2016 — and well below Obama’s 65.7% at the bottom of the recession (Despite typical bullshit by Trumptards)

          That participation ratio is entirely in the tax code, where a double tax increase on large manufacturers essentially destroyed our best-paid union manufacturing jobs. Also the growing inequality, from the loss of higher-paid jobs in ALL types of business (from the same tax change)

          1. Michael Hihn|7.27.18 @ 6:54PM|#
            “I’m not sure how that’s relevant.”

            Of course you aren’t; you’re a fucking lefty ignoramus.

  9. “You’ve got a big hole on the other side of that.”

    TWSS.

  10. The nation’s GDP rose 4.1 percent in the second quarter, but those good numbers aren’t likely to last.

    That is guaranteed to be true without attributing a change in those numbers to anything at all.

    1. Obama’s was 4.9 for the same quarter in 2014. 5.1% for the 3rd quarter.

      1. Convenient that you left out Q1 & Q4 2014. Why is that? 2014Q1: -1%. Oh, that’s why.

        So for the first half of 2014, Obama average: 2.05%, Trump average: 3.15%. In fact for the first half of any year in Obama’s term, trump beats all but one year (2016 @ 3.3%). And his 2.4% in 1H2017 beats all but 3 of Barry’s years.

        1. Convenient that you left out Q1 & Q4 2014. Why is that?

          Not needed to make my point. Likely the same reason you ignored 2017.

          it’s also dishonest to compare a half year with a full year.

          Are you aware that Trump inherited the longest expansion EVER, for ANY President? And that you compare with Obama inheriting the 2nd worst recession since the Depression

          My turn. Why did you TOTALLY misrepresent Labor Force Participation? AND the Civilian Employment-Population Ratio?

          I’m not defending Obama. You’re defending Trump. Is that why?

      2. So Obama’s numbers weren’t likely to last either.

        1. You’ve compared hindsight with foresight.

          Trump inherited the longest expansion of ANY President. And has failed to improve Labor Participation.

          1. Michael Hihn|7.27.18 @ 7:08PM|#
            “…And has failed to improve Labor Participation.”

            Pick them cherries, asshole.

  11. I remember during the Obama years it was all the rage to say that growth was hurt once debt to GDP hit a certain level, and we were very close to it. Any updates on that idea?

      1. That is profoundly dumb and two years old. Then, there’s the goldbug. And the guy comparing to Italy and Greece, who don’t have their own currency.

        1. So, debt to GDP is no problem for you. Kay.

          1. Why do Trumpsters ignore that CBO forecasts HIS new debt at 10.0% … already higher than Obama’s entire 2nd term (9.3%)? 18 months vs 96 months.

            That is profoundly dumb and two years old. Then, there’s the goldbug. And the guy comparing to Italy and Greece, who don’t have their own currency.

            So, debt to GDP is no problem for you. Kay.

            Evasion! (To a truly shameful degree)
            How many ways will you excuse the Trump/GOP shameful debt creation?

            1. About as many as you will excuse for Obama. Entire second term of 96 months. Huh.

              But bring on the incoherent screed.

              1. (posted in self-defense, from aggression by a PROVEN liar)

                But bring on the incoherent screed.

                Why did misrepresent Labor Force Participation and lie about Civilian Employment-Poplataion Ratio?

                My bad math does not change REALITY. Trump has increased the debt more, in 18 months than Obama’s entire second term. Why do you call my math error an “incoherent screed?” Why do you claim I “excused” Obama?????

                Trump campaigned on paying off the entire federal debt in 8 years. He’s off by $31 trillion, So far. WHY?

                1. But bring on the incoherent screed:

                  And hihnsane did, picking cherries he hopes sane people will accept as worth something:
                  “Why did misrepresent Labor Force Participation and lie about Civilian Employment-Poplataion Ratio?”
                  Yeah, and have you checked where the Dodgers stand in the West? I mean if we are going to chose values, lets pick important onew!

                  And then, well, let’s just change the subject:
                  “My bad math does not change REALITY. Trump has increased the debt more, in 18 months than Obama’s entire second term. Why do you call my math error an “incoherent screed?” Why do you claim I “excused” Obama?????”
                  Not enough punctuation, and then I see a claim absent any cite whatsoever, which it expected from Mike the scumbag.

                  “Trump campaigned on paying off the entire federal debt in 8 years. He’s off by $31 trillion, So far. WHY?”
                  Well, it’s a long ways from eight years, asshole. Did you have a point?

                  1. I see a claim absent any cite whatsoever,

                    Orange tells you it’s a link. I also used bold, so you wouldn’t miss it, but you did!

                    which it expected from Mike the scumbag.

                    The link proves YOU as full of shit, as he is. (If anyone needs proof)

                    (smirk)

            2. If I run into one of these “Trumpsters” I’ll ask them your question.

              1. You ignored reality also.

                1. Michael Hihn|7.27.18 @ 9:21PM|#
                  “You ignored reality also”

                  You would be the last to know if that were true, so we can ignore your stupidity.

                  1. You would be the last to know if that were true, so we can ignore your stupidity.

                    Once again, the link PROVES Sevo a psycho liar
                    (sneer)

                    1. Fork U

                    2. swampwiz
                      Fork U

                      Responds to hard proof with infantile giggling
                      The Authoritarian Right be cowardly.

          2. Nope. It’s really not an issue. We could use more inflation than we have!

            The problem is that the Republicans have cut revenue, blown up spending, and the returns are quite meager, and we’re nearing the end of the business cycle. We went in to debt and have little to show for it.

            1. The Krugman is strong in this one.

                1. And one of our resident lefty imbeciles proves once again that linking to anything other than a thread is far beyond the imbecile’s prowess.
                  Are you determined to prove you are a fucking idiot Mike, or is that just a side benefit to those who see your imbecilic posts?

                  1. Anyone who clicks THAT link will see proof Sevo is a psycho in denial of reality.

                    And THIS link proves you TOTALLY insane on me being a lefty. All linked to original sources.

                    Who screams and whines? Who links to proof?
                    (sneer)

                    (posted in defense of aggression by a stalker/cyber-bully Trumptard on the right — where they all are)

                2. Fork U

                  1. (boldface in self-defense of multiple aggressions by a stalking cyber-bully who appears to be 12 years old)

                    swampwiz, cyber-bully stalking me down the page ,…. responds to absolute proof with infantile rage.

                    Fork U

                    (sneer)

            2. Happy Chandler|7.27.18 @ 6:05PM|#
              “Nope. It’s really not an issue. We could use more inflation than we have!”

              Idiotic lefty assertion from lefty idiot who assumes that lefty assertion amounts to an argument!
              Fuck off, slaver

              1. You seem very hostile toward your betters, Sevo.

                Was your bid to switch from third shift on the IT help desk denied again? Does your supervisor, with his elitist degree and fancy people skills, still not recognize your seniority?

                Or are your parents insisting you go back to the doctor responsible for your original placement on the spectrum, and threatening to take away your gaming chair?

                1. You missed one, Rev.

                  The alt-right ALWAYS LIES about “lefties” to disguise their own HATRED for individual liberty.
                  That libertarians have been fiscally conservative and (gasp) socially liberal for 50 years.

  12. “CBO forecasts”

    So, imaginary. Got it

  13. This is really great news for economics way, but I want for information about that so I go to http://techdial.strikingly.com/
    here I found all kind of solution which I will need.

    1. Fork U

  14. Every economist said that we’d see a good GDP simply because of Trump’s ‘pending’ tariffs as companies pre-ordered massive amounts of merchandise and stock before they hit… One on the tube yesterday said it accounted for 1.6% of the 4.1% quarterly GDP we experienced. This will not repeat as now companies have too much supply… Back to 3% again. Big surprise.. Admittedly, Trump is correct.. He did cause this pop! LOL!

    1. Our newest lefty bullshitter posts:
      John B. Egan|7.27.18 @ 6:00PM|#
      Every economist said that we’d see a good GDP simply because of Trump’s ‘pending’ tariffs as companies pre-ordered massive amounts of merchandise and stock before they hit… ”
      “Every economist, you lying pile of shit? Not kidding: please give us the list of “every economist” dimwit.

      “One on the tube yesterday said it accounted for 1.6% of the 4.1% quarterly GDP we experienced. This will not repeat as now companies have too much supply… Back to 3% again. Big surprise.. Admittedly, Trump is correct.. He did cause this pop! LOL!”
      So now one has made a claim?
      Fuck off, slaver,

  15. “GDP Growth Is Good News?But The Narrative! The Narrative! Won’t somebody think of The Narrative?”

    1. Look up-thread; there are plenty of lefties whining that Trump should be impeached or some such bullshit.

  16. The media is forced to give Trump some credit and simultaneously twist what are widely considered strong economic indicators into gloomy indicators.

    1. Obama’s were higher … in 2014 … his cult made asses of themself … same as Trump’s now.
      (smirk)

    2. Obama’s were higher … in 2014 … his cult made asses of themself … same as Trump’s now.
      (smirk)

  17. The quarterly GDP jumps all over the place. And this quarter has the excuse that folks were trying to export to JINA before the retaliatory tariffs there went into effect. Let’s see what 2018Q3 has in store.

  18. “It wasn’t all sunshine and roses: residential investment fell for the fourth time in five quarters, meaning that people are putting less money into a home construction.” So? The factors that determine the breakdown of spending, including consumers’ preferences, change all the time. What matters when trying to gauge the strength of the economy is the total value of goods and services produced. Is anyone concerned that investment in railroad stock was once again lower than in 1912? Or that we spent less on napalm than in 1969?

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