The U.S. economy expanded at an annualized rate of 4.1 percent from April to June, a sharp jump from the first three months of 2018, when the economy grew at a tepid 2.2 percent rate, according to the federal government.
The quarterly growth is the fastest since the third quarter of 2014 and provides President Donald Trump and Republicans a boost as they make the economy a key part of their campaign message heading into November's midterm elections.
But economists caution the robust growth was a result of one-time factors and is likely to be short-lived. The uptick was largely driven by solid consumer spending and a big expansion of U.S. products sold overseas.
Trump cheered the numbers Friday, holding an impromptu press conference outside the White House to tout the "amazing" growth and vow this is just the beginning.
"We're going to get a lot higher than these numbers and these are great numbers," Trump said, flanked by his economic team. "We are now on track to hit an average GDP annual growth of over 3 percent and it could be substantially over 3 percent."
But most independent economists see this quarter as a blip. They expect growth to moderate as exports slow down and the massive stimulus from the tax cuts fades.
"The bottom line takeaway is that this growth is not sustainable and it will slow in the second half of the year," said Lakshman Achuthan, co-founder of the Economic Cycle Research Institute. "President Trump should celebrate this number because it
is going to ease from here."
While the vast majority of economists warn that Trump's trade war will hurt U.S. growth, they say it temporarily boosted growth in the spring as foreign firms rushed to make purchases before the tariffs took effect. Exports added more than a
percentage point to growth, something that hasn't happened in years and is unlikely to repeat.
Soybean exports exploded in the second quarter, as customers in several countries scrambled to snatch up supplies before new foreign taxes on U.S. soybeans went into effect, part of a broad retaliation against Trump's tariffs on a range of foreign
Economists expect the ongoing trade war is likely to curtail growth later this year as foreign companies buy less from the United States.
Trump insisted the experts were wrong and the higher growth would carry on.
"These numbers are very, very sustainable. This isn't a one-time shot," he said Friday.
The Federal Reserve, however, predicts annual growth will be 2.8 percent this year and then fall back to 2.4 percent in 2019 and 2 percent in 2020 as the stimulus from the tax cuts and added government spending fade.
The Trump administration has repeatedly predicted growth will be 3 percent a year for years to come, a projection most mainstream economists see as overly optimistic.
"Over the last 12 months, the economy has grown by 2.8 percent, which is a bit better than it has done recently, but is in no way the strongest growth during this expansion," said Paul Ashworth, chief U.S. economist at Capital Economics. "And it's
still short of what the Trump administration promised."
Personal consumption was strong in the second quarter, likely aided by the reduction in taxes for many Americans and the increase in optimism about the economy, especially among Republicans.
"While we always expected a bounce back in consumption, it was more powerful than anticipated and speaks to the impact of an increasingly tight labor market and strong job growth on consumer income and household's confidence," said Brian Coulton, chief economist at the ratings agency Fitch.
Business investment in equipment and structures was positive, although the lion's share of the growth was coming from Americans opening their wallets. A bump in federal government spending also added to the pick up in the spring.
Most economists expect the growth will fade from here as exports slow down and the stimulus diminishes.