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Has the magic of US President Donald Trump’s tariffs worked? This question arises because the growth figures of America that have been seen are really surprising. America’s growth has crossed 4 percent, shattering all estimates. The special thing is that the growth figures have broken the record of 2 years. Whereas his tariff policy was being criticized not only in America but all over the world. Everyone’s guess was that America would be seen lagging behind on the economic front. Trump will sink America because of his policies. But nothing like this happened and the figures tell the story of their success on their own. Let us also tell you what kind of figures have come out regarding the American economy?
Win on the economy front
The US economy grew at a rate of 4.3 percent in the July-September quarter of this year, which is the fastest growth in the last two years. This growth was more than expected due to strength in consumer spending, government expenditure and exports. The US Commerce Department said in a report released on Tuesday that gross domestic product (GDP) growth during the July-September quarter was faster than 3.8 percent in the April-June quarter. This growth rate has been faster than analysts’ estimates. A survey by data firm FactSet had estimated a growth of about three percent for this period.
Why did the economy grow?
However, the report also said that inflation still remains above the desirable limit of the US Federal Reserve. The Federal Reserve’s favorite inflation indicator, the personal consumption expenditure index, increased to 2.8 percent in the September quarter, from 2.1 percent in the June quarter. Consumer expenditure, which accounts for about 70 percent of the US economy, increased to 3.5 percent in the last quarter. At the same time, government consumption and investment increased by 2.2 percent, which was supported by spending at the state and local levels and federal defense spending.
Decrease in private investment
In contrast, there was a 0.3 percent decline in private business investment in the last quarter. However, this was much lower than the sharp decline of 13.8 percent in the June quarter. During the period under review, America’s exports increased by 8.8 percent while imports decreased by 4.7 percent. According to the report, an index showing the fundamental strength of the economy grew at the rate of three percent, whereas it had increased by 2.9 percent in the June quarter.
Weakness in labor market
Despite inflationary pressure, the US Central Bank has cut interest rates three times in a row till the end of 2025, for which the weakness in the labor market has been a major reason. According to the data released last week, 64,000 new jobs were added in November while there was a decline of 1.05 lakh in employment in October. Last month, the unemployment rate rose to 4.6 percent, the highest level since 2021.