Be Very Afraid, China – Trump Thinks U.S. Economic Growth Could Shoot Up To 9 Percent

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Jul 29 2018
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United States registered a sterling GDP growth of 4.1% in the second quarter, arguable its best since 2014. The number matched expectations from economists. Four years ago, Obama saw 4.9% rise in gross domestic product in the third quarter of 2014. Besides the good news, the U.S. Commerce Department revised its first-quarter reading up from 2% to 2.2%.


That is quite an awesome economic growth. In typical situation, a U.S. president or an economist would be prudent with the number. They would try to be humble about the future growth to prevent the public from unrealistic expectation. Under Steve Jobs, Apple Inc. had always set a low expectation so that the company will always hit the number every earning quarter.


Donald Trump, however, is no typical politician, obviously. Instead of cautiously or prudently respond to the data from the Commerce Department, the U.S. president has instead been emboldened by 4.1% economic growth last quarter. In a surprise radio interview on Friday, Trump proudly announced that the good time has just begun.

Donald Trump - Cap Make America Great Again

Trump assured Sean Hannity during the interview – just hours after the Bureau of Economic Analysis released the 4.1% GDP growth – that the U.S. economy under his administration is “going to get better” – that he will cut the trade deficit in half, deliver 8-to-9 percent GDP growth and turn the projected US$1 trillion budget deficit into a surplus.


Trump said – “The economy, we can go a lot higher. We’re on track to hit the highest annual growth rate in over 13 years. And I will say this right now and I will say it strongly, as the deals come in one by one, we’re going to go a lot higher than these numbers, and these are great numbers. If I cut it (trade deficit) in half, right there we will pick up three or four points. We’d be at eight or nine percent.”


In comparison, world’s second biggest economy and U.S. rival – China – grew at a rate of 6.7% in the second quarter. Hence, Trump’s claim about achieving GDP growth of 8% or 9% is far higher than China’s growth. The U.S. economy actually has not grown at a rate close to 8% since the 1980s. However, Trump did not specify whether he was referring to an annual or quarterly growth rate.

US-China Trade War - Flexing Muscles

President Trump has previously announced his goal of growing the nation’s economy at an annual rate of 3%. But if what he meant on Friday – hitting growth of 8% or 9% – was indeed referring to the U.S. annual growth, which is unlikely, then China should be very afraid. Trump said – “I look forward to seeing next quarter … I think the 4.1 is just a stepping stone.”


Republicans hope a strong economy will help to prop them up as they try to stop an energized and motivated Democratic Party from taking a House majority in mid-term election in November. Democrats are favoured to regain control of the House, while Republicans are expected to maintain a thin majority in the Senate.


That probably explains why Trump gave his unbelievable prediction on U.S. GDP growth. The mid-term election could also be the primary reason why Trump agreed to work nicely with EU instead of going for a trade war. It was also the same mid-term election that has forced Trump to pressure Saudi Arabia and its OPEC minions to bring down the crude oil prices.

United States Average Annual GDP Growth - Can Donald Trump Outperform

However, economists and analysts warned the bullish number may have been artificially boosted by a flood of exports in the second quarter as countries race to get American goods, such as soybeans, in anticipation of higher tariffs due to trade war with China. Anyway, Trump didn’t care and compared his economic superior numbers to those of George W. Bush and Barack Obama.


The POTUS said – “During each of two previous administrations (Bush and Obama), we averaged just over 1.8% GDP growth. By contrast, we are now on track to hit an average GDP annual growth of over 3%, and it could be substantially over 3%. Each point, by the way, means approximately US$3 trillion and 10 million jobs.


Even if the U.S. economy could grow at a sustain rate of 4.1% for the entire year 2018, it would be a great year for the Americans. For the year 2017, the read GDP growth was 2.3% while a year earlier in 2016, it was 1.5% – the final year of Barack Obama’s second term. In the event Trump successfully hit the 8% or 9% growth, it could only mean one thing – China has lost the trade war.

Donald Trump - Thumbs Up and Kiss


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