Friday’s economic data provided evidence the U.S. economy is heading into the second half of 2018 with strong momentum. Economists are slowly ratcheting up expectations for growth through the end of the year, with widely followed measures putting the second quarter at between 3.6 percent and 4.8 percent.
There are fears that of a trade war and a synchronized global slowdown.
The Atlanta Fed’s GDPNow tracker sees the second quarter rising by 4.8 percent. While the measure also was strongly optimistic on the first quarter as well, at one point estimating 5.4 percent growth, other gauges are positive as well. CNBC’s Rapid Update, for instance, puts the April-to-June period at 3.6 percent.
Andrew Hunter, U.S. economist at Capital Economics, said the ISM number alone is consistent with GDP growth of better than 4 percent, though he thinks the second quarter will be in the 3 percent to 3.5 percent range.
Exports make up just 12.4 percent of the U.S. economy, but S&P 500 companies generate about 43 percent of their sales internationally.
While inflation could prompt more aggressive action in the form of Federal Reserve interest rate hikes, PNC’s Faucher sees an economy resilient enough to withstand that and other headwinds.
“The tight labor market is going to lead businesses to invest in capital that makes their workers more productive. Then you’ve got stronger government spending with the increase in discretionary spending caps,” he said. “I think we’ll see growth better than 3 percent in the final three quarters of the year.”