Trump on 4.1 Percent Growth: 'An Economic Turnaround of Historic Proportions' (July 27, 2018)

On the morning of July 27, 2018, minutes after the government released its first estimate of economic growth for the second quarter, President Donald Trump spoke on the South Lawn of the White House [1]. “I am thrilled to announce that, in the second quarter of this year, the United States economy grew at the amazing rate of 4.1 percent,” he said [1]. This video shows his remarks. Quotes are from the official transcript published by the American Presidency Project [1], and each economic claim below is checked against government data and contemporaneous fact checks.

Key Moments

”The amazing rate of 4.1 percent”

Trump said the economy was “on track to hit the highest annual average growth rate in over 13 years,” and that “As the trade deals come in one by one, we’re going to go a lot higher than these numbers.” He compared the result with his predecessors: “During each of the two previous administrations, we averaged just over 1.8 percent GDP growth. By contrast, we are now on track to hit an average GDP annual growth of over 3 percent, and it could be substantially over 3 percent.” He added that Larry Kudlow, director of the National Economic Council, and Kevin Hassett, chairman of the Council of Economic Advisers, had “just confirmed to me” that “these numbers are very, very sustainable. This isn’t a one-time shot” [1].

”The trade deficit … has dropped by more than $50 billion”

“Perhaps one of the biggest wins in the report, and it is indeed a big one, is that the trade deficit — very dear to my heart, because we’ve been ripped off by the world — has dropped by more than $50 billion — $52 billion, to be exact,” Trump said, adding that it was “adding — one point to GDP” [1].

”An economic turnaround of historic proportions”

“We’ve accomplished an economic turnaround of historic proportions,” he said, listing record-low unemployment rates for Black, Hispanic and Asian Americans and Americans with disabilities, the lowest rate for women “in 65 years” and for veterans “in 18 years,” and 3.7 million jobs added “since the election.” He also said business investment had grown “at only 1.8 percent” the year before he took office, “jumped to 6.3 percent” in 2017 and was “growing at 9.4 percent” in 2018 [1].

Fact Check

“4.1 percent.” Accurate. PolitiFact confirmed the figure, called it “the highest since the third quarter of 2014,” and noted that quarterly growth of 4 percent or more had been reached four times under President Barack Obama, including 4.6 percent twice and 5.2 percent once [2]. The Bureau of Economic Analysis later revised the quarter to 4.2 percent [3].
“We averaged just over 1.8 percent.” Close. CNN found that “the average of the annual real growth rates of the past two administrations was 1.9%,” a period that included the worst downturn since the Great Depression [4].
The trade deficit “dropped by more than $50 billion.” Exaggerated. FactCheck.org found that Trump used figures stated at annual rates, which “are, in other words, four times larger than the actual value of imports and exports for the quarter,” and that, measured in current dollars, the trade deficit “went down by $20 billion from the first quarter of 2018 to the second quarter.” It rated the claim “Exaggerates” [5].
Record-low unemployment for several groups. Accurate, with context. CNN reported that “those numbers are all correct,” but that the rates “have been falling fairly consistently since 2010” [4].
Business investment “1.8 percent … 6.3 percent … 9.4 percent.” PolitiFact found that “the math checks out” [2].
“On track to hit an average GDP annual growth of over 3 percent.” Not borne out. The Bureau of Economic Analysis reported that real GDP grew 2.9 percent in 2018, up from 2.2 percent in 2017 [6], and 2.3 percent in 2019 [7].

Background: Why One Quarter Matters Less Than It Sounds

GDP figures are reported as annualized rates: a quarter’s growth is expressed as the pace the economy would grow if it continued for a full year [3]. That is why a single strong quarter, such as the second quarter of 2018, can be much higher than the growth for the year as a whole. It is also why, as FactCheck.org explained, components of GDP such as exports and imports cannot be compared directly with quarterly trade totals without dividing by four [5]. PolitiFact noted that a strong quarter was not unusual: quarterly growth of 4 percent or more had occurred several times during the Obama years without lifting annual growth to 3 percent [2].

What Happened Next

2018 as a whole: The economy grew 2.9 percent in 2018, the year Trump said it was “on track” for more than 3 percent [6].
2019: Growth slowed to 2.3 percent [7].
The second-quarter figure: The Bureau of Economic Analysis’s third estimate, released in September 2018, put second-quarter growth at 4.2 percent [3].