US GDP growth rate doubles to more than 4% in second quarter of 2018

The annualised growth rate was 4.1 per cent in the three months to June, almost double the 2.2 per cent rate in the first quarter and the strongest figures since the third quarter of 2014

Donald Trump promised to raise the US GDP growth rate back to 4 per cent through major tax cuts and infrastructure investment (AP)

US GDP growth soared to more than 4 per cent in the second quarter of 2018, according to official data released on Friday.

The Bureau of Economic Analysis (BEA) reported that annualised growth rate was 4.1 per cent in the three months to June, almost double the 2.2 per cent rate in the first quarter and the strongest figures since the third quarter of 2014.

The statistics agency said that there were positive contributions from household spending, exports and business investment.

The data is likely to be heralded by Donald Trump, who promised to raise the US GDP growth rate back to 4 per cent through major tax cuts and infrastructure investment.

The public investment has not materialised, but Congress did vote to slash personal and business taxes at the end of 2017.

“The economy was already on the up before Trump’s tax cuts added further fiscal fuel,” said Nancy Curtin of Close Brothers Asset Management.

“The tax cuts are now filtering through to the real economy as companies have been empowered to increase investment spend, the lion share of which is going into technology and automation.”

But some analysts think that the growth rate could fall back later this year, as Trump’s trade war will undermine business confidence.

"Overall, helped by the massive fiscal stimulus, the economy enjoyed a strong first half of this year but, as the stimulus fades and monetary policy becomes progressively tighter, we expect GDP growth to slow markedly from mid-2019 onwards," said Paul Ashworth of Capital Economics.

“We would suggest that 4.1 per cent overstates the underlying pace of activity, but the tax cuts and impacts of deregulation are likely to keep economic growth accelerating from this point,” said Rob Hodgson of GWM Investment Management.