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GDP growth is better than expected: Trump lauds report, but presidential candidate calls out gig economy

July 26, 2019

Real gross domestic product rose at an annual rate of 2.1% in the second quarter, according to a report out today. That is below the first quarter’s rate of 3.1%, but it’s better than expected, says Bart van Ark, chief economist at The Conference Board. On the other hand, the economy also became political on both sides of the aisle. Democratic presidential candidate Pete Buttigieg saying the US economy isn’t working for everyone and calling out the gig economy over worker protections. But today’s economic report was lauded by the president.

The GDP reported today reflects an “advance” estimate by the US Bureau of Economic Analysis.

Van Ark noted strong consumption growth in the second quarter wiped out weakness observed at the end of 2018 and beginning of 2019.

“However, the strength of the economy is rather unbalanced,” he said. “The growth rate of investment was negative across the board, except for technology investments. Combined with a decline in exports, largely due to weaknesses elsewhere in the global economy, this report suggests growth to retain its strength at just over 2% for the second half of 2019.”

CNBC reported Michael Arone, chief investment strategist at State Street Global Advisors, said the GDP report indicated talk of a recession is premature.

“Those that were doing the ‘Chicken Little, the sky is falling, we’re headed for recession’ talk were clearly early in that assessment,” Arone told CNBC. “The economic data continue to suggest that the economy isn’t near recession, at least in the next year or so.”

Separately, in an economic plan released today, Buttigieg called out the gig economy.

“More than half of workers in Google’s offices do not share in Google’s success because they are domestically outsourced temps and contractors, while millions of Uber and Lyft drivers lack basic protections because they’re misclassified as independent contractors,” according to his plan.

Bloomberg reported separately that Google was transitioning some contingents to traditionally hired workers.

Buttigieg’s ideas also include codifying the stricter “ABC test” for determining independent contractor misclassification, allowing some ICs to unionize and increasing funding to fight misclassification.

However, Donald Trump lauded the growth in a tweet.

“Q2 GDP Up 2.1% Not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck. Almost no inflation. USA is set to Zoom!” Trump tweeted.

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