According to the U.S. federal government, the economy continues to show signs of strength as the Gross Domestic Product (GDP) expanded at a 4.2% annual pace in the second quarter, which was a tad higher than the preliminary estimate of 4.1%. Consumer spending was also strong but not as strong as it was predicted as the fed indicates that outlays rose 3.8% instead of the predicted 4%.
Exports were up, while imports were down which reduced the trade deficit - another fortifier for the GDP. Government spending, was also up from 2.3% instead of 2.1%, a bump attributed to military spending.The rate of inflation also ticked up to 1.9% as opposed to 1.8%.The bulls boast that key stock indexes such as the S&P 500 are setting new record highs and that consumer confidence rose in August to the highest level in 18 years.
What’s more, the U.S. has averaged just 2% annual growth during the current nine-year-old expansion. Most economists contend GDP can’t expand much faster than that because of low productivity and a slower increase in the population, the two most critical launching pads for growth. “The bottom line is that the economy remains on a solid growth path and still appears to have the potential to remain on a positive track for some time to come,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
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