US economy grows at fastest pace since 2014 in Q2

The US economy grew at its fastest pace since 2014 in the second quarter, according to data released by the Commerce Department on Friday.

US economic growth accelerated to a rate of 4.1% on an annual basis from a revised 2.2% in the first quarter, in line with analysts' expectations. The previous quarter's growth was revised up from 2%.

The annual growth rate was at its highest since the third quarter of 2014, when it grew at 4.9%. Growth was boosted by consumer spending, which rose 4% in the quarter versus 0.5% in the previous quarter. Meanwhile, business investment growth came in at 7.3%, down from 11.5% in the first quarter but still strong.

US President Trump had said on Thursday that he expected the data to be "terrific", adding that he would be happy if there was a 4 in front of it.

"Somebody actually predicted today, 5.3. I don't think that's going to happen - 5.3. If it has a 4 in front of it, we're happy. If it has like a 3 but it's a 3.8, 3.9, 3.7, we're OK," the president said in a speech about trade in Illinois.

Trump was quick to take to Twitter after the release.

GREAT GDP numbers just released. Will be having a news conference soon!

— Donald J. Trump (@realDonaldTrump) July 27, 2018

Capital Economics economist Paul Ashworth said the GDP figure should ensure that the Federal Reserve continues to hike its policy rate once every quarter, particularly as core PCE consumer prices increased by 2% annualised, which is the second consecutive quarter that consumer price inflation has been running at or above the Fed's target.

"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 Ashworth.