ARLINGTON, Va.—As CUToday.info reported earlier, Commerce Department data show the 4.1% growth in Q2 was the fastest in four years. And that has credit unions wondering how much longer the good times can last.
Currently, it’s everyday Americans who keep pouring fuel on the fire.
"Consumer spending rebounded strongly after a slow start to the year, supported by a strong labor market and stimulative tax cuts," said NAFCU Research Assistant Yun Cohen Cohen in a NAFCU Macro Data Flash report. "…Looking ahead, economic growth is expected to remain strong for the rest of 2018. The pace of expansion, however, will likely decelerate as the effects of tax cuts fade and as the Fed raises rates further."
As CUToday.info has reported, several economists have told credit unions this year they anticipate a slowdown in 2020.
Contributions to growth of real GDP came from gains in personal consumption expenditures (+2.69%), net exports (+1.06%), nonresidential investment (+0.98%) and government spending (+0.37%). Inventory investment and residential investment dragged growth by 1% and 0.04%, respectively, Cohen said.
"Net exports rose markedly, partially due to a surge in soybean trade in advance of the retaliatory tariffs," Cohen said. "The front-loading of soybeans and other products also contributed to a reduction of inventory accumulations. Business investment remained strong while residential investment fell for the second straight quarter."
Personal consumption expenditure (PCE) inflation, the Fed’s preferred inflation metric, decreased from 2.5% in the first quarter to 1.8% in the second. Core PCE inflation (excluding food and energy) decreased from a downwardly revised 2.2% in the first quarter to 2% in the second quarter.