The United States economy expanded at a modest two percent annual rate in the second quarter, falling short of the average three percent-plus rates the country has enjoyed over the last couple of years.
In the April-to-June period, the U.S. economy expanded way below the 3.1 percent gain in the January-to-March time frame.
According to the Department of Commerce, the U.S. is expected rise 2.2 percent for the year, down from last year’s 2.9 percent.
So, what the heck is happening?
Trade and fading tax cuts.
It turns out that President Trump’s trade war with China has hurt both the U.S. and global economies, impacting the output of goods and services. Now that the positive effects of the tax cuts are fading, the administration is considering another tax cut to boost and sustain growth.
The Associated Press also makes an interesting point:
“While the economic recovery from the Great Recession is now in its 11th year, the longest in U.S. history, it has been the slowest in terms of annual growth rates, a fact economists attribute to slower growth in the labor market, due to the retirement of baby boomers, and a slowdown in productivity.”
Perhaps the Federal Reserve’s interest rate cuts will provide some stimulus.
That said, President Trump better hopes he loses the 2020 election because the next financial crisis might happen in the next few years. If he wants to secure his legacy, he should hope former Vice President Joe Biden, Senator Elizabeth Warren (D-MA), or Representative Tim Ryan (D-OH) wins the nomination and the general.
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