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US GDP, Q2 2018 advance estimate

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american flag barn iowa
Friday’s
GDP number was expected to be strong, partly because exports
surged as buyers stockpiled on concern that trade disputes would
worsen.

REUTERS/Jim
Young


The Commerce Department will at 8:30 a.m. ET release its first
estimate of the US economy’s growth during the second
quarter. 

Economists forecast that Gross Domestic Product (GDP), the
total value of all goods and services produced domestically, rose
by 4.2%.

That would be the fastest pace since the third quarter of
2014. 

President Donald Trump has already hinted that it’s going to be a
strong number, again breaking with tradition of US presidents not
commenting on major economic data pre-release. Trump
also talked up the May
jobs report
, which turned out to be strong. 

“Somebody actually predicted today 5.3 [percent],” Trump

said
during a rally Thursday at a steel plant in
Illinois.

“If it has a 4 in front of it, we’re happy.” A
three-percent handle would be “okay,” he added. 

But there are other reasons why, in the second quarter, the
economy likely accelerated from the 2% pace of growth recorded in
Q1.

First-quarter growth tends to undershoot the rest of the year
because of the so-called residual seasonality issue that stems
from how the Commerce Department adjusts for calendar and holiday
effects. 

Also, Q2 was the first full quarter since Trump signed corporate
and personal tax cuts into law. Personal consumption is forecast
to have risen at a 3% pace from 0.9% in Q1. 

The economy likely got a boost from net exports and inventories,
too.

“We find evidence that the hefty contributions from these two
categories is likely a reflection of stockpiling ahead of the
implementation of trade tariffs, and so they are likely to
subtract from growth in the following quarters,” Ellen Zentner,
Morgan Stanley’s chief US economist, said in a preview. 



More to come, refresh this page at 8:30 a.m. ET for the
latest. 

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