Good news for the US economy, as it grew at its fastest pace in two years as a result of soybean exports. The gross domestic product increased at a 2.9 percent annual rate. This is the strongest growth rate since the third quarter of 2014 and beat out the economists’ expectations from a 2.5% expansion pace.
As David Donabedian, the chief investment officer of Atlantic Trust Private Wealth Management in Baltimore said, “While the economy may not be ready to take off, today’s GDP suggests the economic expansion is not at risk of ending.”
The GDP report has actually been seen as a way to bolster Hillary Clinton, two weeks before the election. As Robert Murphy, an economics professor at Boston College said,
“This is good news for the Clinton campaign, which has tied itself closely to the Obama administration’s record on the economy.”
Bill Gross’s Pacific Investment Management Co., or Pimco, recently raised its outlook for the U.S. economy, stating that expansion is likely to be between 2.5% and 3% over the course of the year. At the end of last year, the fund estimated growth of between 2.25% and 2.75%.
According to Pimco, the adjusted assessment is a result of “trends toward growth and spending in the consumer, corporate and public sectors.”
“The global economy will likely experience steady, broad-based growth in 2014 thanks in no small part to the extraordinary expansion in central bank balance sheets in 2013,” said portfolio manager Saumil H. Parikh.
Pimco’s report went on to explain that “rising asset prices in combination with fading near-term fiscal uncertainties will drive global aggregate demand growth forward, adding stability to what has thus far been an on-again, off-again global recovery from the financial crisis of 2008.”
Pimco also reassessed its outlook for the euro zone, now claiming to expect real economic growth in the region to measure between 1% and 1.5%.
“We expect the reduction in fiscal drag in the euro zone periphery will reinforce gradually improving credit conditions to drive aggregate demand growth from well below potential to up toward potential in the year ahead,” Parikh said.
The report also revealed the fund’s expectations for China and Japan in 2014.
This weekend, President Barack Obama spoke at the Asia-Pacific Economic Cooperation summit in Honolulu, stating that China is now a “grown up” economy, and must learn to act more responsibly on its currency.
“We welcome China’s peaceful rise,” he said, but Beijing should cease “gaming” the international economic system and help level the field for foreign businesses from the U.S. and around the world. He added that China is deliberately keeping its national currency at a low point in order to support Chinese exporters.
“Most economists estimate that the renminbi (yuan0 is devalued by 20 to 25 percent,” he said. “That means our exports to China are that much more expensive and their imports into the United States are that much cheaper.”
The U.S. Chamber Institute for Legal Reform released a report estimating the potential gains of each state if the legal environment is improved at its 12th Annual Legal Reform Summit this week.
“Americans are rightly frustrated about the current state of the economy,” explained Lisa A. Rickard, president at ILR. “Unfortunately, America’s broken lawsuit system hampers the ability of American businesses to create jobs and drive much-needed economic growth.
“At times when states are facing tight budgets and sluggish economic growth, this new study shows that actions by states to improve their legal environments can produce real economic dividends.
Rickard was joined by the U.S. Chamber of Commerce President and CEO Thomas J. Donohue, as well as House Speaker John Boehner, South Carolina Governor Nikki Haley and Virginia Governor Bob McDonnell at the summit.