The US economy is set to come roaring back to life in the second half of the year on the back of a bumper summer food harvest.
Figures out this afternoon showed the world's largest economy grew by 1.4 per cent on an annualised basis in the second quarter of the year – a slight upwards revision from previous estimates of 1.1 per cent. However, exports smashed expectations, with analysts suggesting sky-high sales of soybeans could be enough on their own to underpin a dramatic return to growth.
After trundling along in the first half of the year, Ian Shepherdson, chief economist at Pantheon Economics thinks the US economy could grow at a clip of four per cent in the third quarter.
Food exports came in at more than $14bn for the months of both July and August – well above the $11bn recorded in June, with Shepherdson suggesting the surprise figures will force economists to up their predictions for the US economy.
Not all analysts shared the enthusiasm. Paul Ashworth at Capital Economics said weak retail sales will remain a drag and predicted GDP growth will come in at 2.5 per cent for the three months to the end of September.
Yesterday, the head of the International Monetary Fund (IMF) Christine Lagarde warned the US would grow slower than expected on the basis of its poor first six months of the year, where growth averaged around one per cent on an annual basis.
Whatever the headline growth rate comes in at, it is unlikely to shift the short-term thinking inside the US Federal Reserve over the timing of the next interest rate hike. Growth numbers tend to lag other, more indicative, data such as employment and inflation – the two areas the Fed is mandated to target.