Gross domestic product grew at a solid 4.1 percent pace in the second quarter, boosting hopes that the economy is ready to break out of its decade-long slumber. The number matched expectations from economists surveyed by Reuters and was boosted by a surge in consumer spending and business investment.
Fox Business reports,
President Trump said ahead of the growth reading that he would be “happy” with a quarterly GDP reading of at least 4%. Trump has previously pledged that annual U.S. GDP growth would come in above 3%.
The Trump administration has implemented pro-growth policies, including a sweeping tax reform package meant to bolster businesses. The last time annual GDP growth was above 3% was in 2005 when it came in at 3.3%. George W. Bush was president when the U.S. economy hit this growth rate. The best annual GDP reading under President Barack Obama was 2.9%.
GDP is a measure of a country’s economic output – and is made up of personal consumption, business investment, government spending and the difference between exports and imports.
Economic growth depends a lot on how consumers and businesses feel about the economy. When individuals are positive about their finances they are more likely to spend, and the same goes for businesses. Tax reform was meant to boost both individuals and businesses, lowering the corporate tax rates to increase the money businesses have to invest in growth while also increasing take home pay for many Americans. The latest GDP reading suggests that this strategy is working.