U.S. economy hits Trump's 3% growth target in Q2

NikolayFrolochkin  Pixabay
NikolayFrolochkin Pixabay

01 September, 2017

Based on Thursday's data, Rangasamy says, National Bank has upgraded its Canadian GDP growth forecast for 2017 to 3%.

"The general situation of the economic growth remain unchanged, with an increase in consumer spending and investments in non-residential real estate more important than in the previous quarter", said the ministry, stressing that " these increases were partially offset by a slight decline in public spending ".

Today's figures have raised expectations that the country's central bank will hike interest rates again by October. Fixed nonresidential investment rose at a 6.9% pace last quarter, up from an initial estimate of 5.2%, including stronger spending on software.

It was a stronger showing than the 3.5- to 4-per-cent pace analysts had been expecting.

President Donald Trump has promised to grow the GDP to 3% and higher, but economists have doubted this could actually happen due to an "ageing [sic] population and poor productivity growth".

Advertisment Canada's economy is expanding at its fastest annualized rate in six years. So far, Trump's economic agenda has not made it through Congress.

From April to June, the expansion of the GDP of the United States is established at 3 % in an annualized and seasonally adjusted data, compared to +1.2% in the first quarter.

The Canadian dollar surged more than 1 per cent against its USA counterpart on Thursday after data showing the strongest economic growth rate in almost six years, boosting chances of another interest rate hike from the Bank of Canada.

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The U.S. dollar softened against a basket of currencies following lackluster U.S. economic data that failed to boost expectations for another Federal Reserve rate increase this year.

The economic momentum was driven by stronger consumer spending and healthier business investment.

The average for the first half of 2.6-percent growth in real consumer spending is pretty close to last year's clip and is quite solid. "It puts us on a stronger path going into the third quarter, although Hurricane Harvey introduces some uncertainty".

As it stands, traders think there's about a one-in-three chance of that happening.

Canadian government bond prices were mostly lower across the yield curve, with the two-year price down 7 Canadian cents to yield 1.275 per cent and the 10-year falling 13 Canadian cents to yield 1.851 per cent.

Before the report, Desjardins was projecting 2.9 per cent growth for 2017.

With good news about Canada's economy rolling in on a regular basis in recent months, Canadians are feeling pretty positively about the future.

"Overall the US economy and labor market remain in good shape, and will easily withstand any temporary drag from Harvey", Gus Faucher, chief economist at PNC Financial, wrote in a report on Wednesday.

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