The Commerce Department reported this morning that real gross domestic product (GDP) surged to an annual rate of 4.1% in the second quarter of this year – a rate not seen since 2014.
U.S. GDP grew at double the 2.2% rate reported in the first quarter of 2018, bolstered by a surge in exports and defense spending.
The spike in GDP follows June’s one percent gain in U.S. durable goods orders as reported by the Commerce Department on July 26th. Additionally, the Federal Reserve recently reported an uptick in industrial output.
By the numbers
The BEA’s new GDP figure is based partially on a spike in exports, as U.S. producers scramble to get their products to market as trade tensions increase. Exports surged 9.3% in the second quarter -- a rate not seen since the fourth quarter of 2013.
Many of the nation’s exporters, eyeing accelerating trade tensions, including the USTR’s announcement of tariffs enacted on 6,000+ Chinese products, worked to deliver their products as quickly as possible in advance of any retaliatory measures. Current-dollar GDP rose a whopping 7.4% in the second quarter of 2018, according to the BEA, amounting to a $361.5 billion increase, to its current level of $20.4 trillion.
National defense spending increased 5.5% in the second quarter, following a 3% increase in the first quarter.
Prices were on the rise in the second quarter, with the gross domestic purchase index up 2.3%.
Multiple reports point to growth in manufacturing
Additional reports reflect a growing U.S manufacturing sector as industrial production and new orders continue to gain ground. The Federal Reserve recently reported a resurgence in industrial output in June, led by a rebound in auto production.
U.S. industrial production and capacity utilization rose 0.6 percent in June, following a 0.5% decline in May. Notable in the Fed’s report was a second-quarter increase 6% in industrial production, in line with the positive trend in GDP reported this morning.
In addition, the Commerce Department reported a 1% increase in new orders for manufactured durable goods in June, reflective of a $2.5 billion increase. This follows two straight months of declines in durable goods orders.
Transportation equipment led the increase in durable goods orders for June, with that sector up 3.8%.
IndustryNet reported on manufacturing employment growth in Washington and Texas this month, as well as increased employment among the nation’s hot-rolled steel producers and an uptick in sales for suppliers of galvanized steel.
Washington State leads nation’s GDP growth
GDP growth was generally consistent across the nation in the second quarter of 2018. Washington State led gains with a 3.6% increase in GDP, followed by Utah, with a 3.2% increase, and South Dakota with a 3.1% gain. GDP in Colorado rose 3%, while Iowa and Texas tied for fifth place at 2.9%.
North Dakota was the only state to show negative GDP growth, down a half percent, while Arkansas broke even at 0% GDP growth.
