Election of the Republican nominee Donald Trump as a President of the United States sparked a lot of controversy and skepticism among many voters, politicians, and observers. Barack Obama, his predecessor, was elected at a time when the United States have totally sunken in the economic crisis, yet he somehow managed to restore consumer confidence, return the country on the track of an economic growth, and clean the banking system. Yet, many observers have been seriously concerned that the election of Donald Trump will slow down the recovery. Exchange indices collapsed on the day when the election results became known.
However, that was not the case and the American economy gained a momentum during the first quarter of Donald Trump’s presidency. In the period from April to June, the economic growth in the United States speeded up to 2.6% of the annual basis – this indicator has matched the forecasts of economists, who predicted such an economic growth previously.
In the second quarter, the economic growth more than doubled, as the growth in the first quarter was reconsidered down to 1.2%. The Commerce Department pointed out that the American economy has received such a boost in the second quarter largely thanks to stronger consumer spending. The robust labor market has also contributed to this, as the growth of personal spending speeded up to 2.8%, which appears to be much faster than in the first quarter.
Such a news is a good sign that the American economy is getting back on the track of a stable economic growth. Many economists and observers fretted that the majority of Americans were reluctant to spend more, so this boost of consumer spending really comes at a time when it’s needed the most.
However, it was not only the boost in consumer spending that benefit the American economy, but government spending as well. Andrew Hunter, who works as an economist at Capital Economics, pointed out that “the real economy keeps growing and appears to be in a good shape.”
The election of Donald Trump sparked concerns about the future of the American economy
One of the things that dragged the economic growth back was the housing market. Residential investments (they typically include both apartments and houses) have fallen by 7% in the last quarter. Exports also tumbled in the second quarter, holding the growth back.
During his presidential campaign, Donalt Trump promised that the economy will expand no less than 4% per year. After taking office, however, he cut that goal to the more moderate indicator of 3%, and the economy is not far from reaching that point.
What boosted confidence among consumers and raised expectations about a faster growth were a massive infrastructure spending and tax cuts, both promised by president Trump. Yet, the president wasn’t able to push his proposals through the Congress, so the expectations for accelerated growth have fainted.
At the same time, the IMF lowered its forecasts of the U.S. economic growth for the current and next year, caused by uncertainty over Donald Trump’s policies. Moreover, the American dollar has been noticeably devalued in the recent months, which points to a weaker state of the economy.
By the way, the American labor market is also on the rise.