Jul 27, 2018

Axios PM

By Mike Allen
Mike Allen
1 big thing: How to think about Trump's 4% growth
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Data: Bureau of Economic Analysis; Chart: Chris Canipe/Axios

President Trump got his triumphant 4% economic growth moment today, and he threw together a surprise speech to celebrate on the White House's south lawn.

The big picture: This is the best quarterly growth since 2014. Trump claims we're on track for 3% this year, and previously promised rates that are even higher (and rather unlikely). Former president Barack Obama enjoyed four quarters of 4%, but his highest year topped out at 2.9%.

The good from the report:

  • Americans are saving more than we thought: "The data show the average savings rate at [7%] between 2013 and 2017, up from the previous figure of [5%]." — FT's Kadhim Shubber
  • Consumer spending is up: "Larger paychecks, pushed up in part by tax cuts and the tightening labor market that’s forcing employers to offer heftier pay, are encouraging spending." — WSJ

And the not-so-good:

  • "One-time factors": Several areas of major growth in the report were in soybeans, with farmers rushing to sell before tariffs, and oil and gas investment, which is dependent on unstable prices. — AP's Christopher Rugaber
  • Rising borrowing costs because of Federal Reserve's interest rate hikes.

Reality checks... MarketWatch's Steve Goldstein rated multiple Trump claims today. Three of note:

  1. True, if the economy doesn't stumble in Q4: “We are now on track to hit an average annual GDP of over 3%..."
  2. Possibly, but not a lock: “We are on track to hit the highest annual average growth rate in over 13 years.”
  3. Unlikely: “I will say this right now, and I will say this strongly, as the trade deals come in one by one, we’re going to go a lot higher than these numbers."

The bottom line: "The economy’s annualized growth of 4.1% in the second quarter is unlikely to be repeated soon," the WSJ's Greg Ip notes.

  • "Yet the underlying details are still impressive, pointing to an economic expansion that has picked up vigor and still has plenty of room to run."

Go deeper: Why stocks went down when the GDP went up

Bonus: Pic du jour

President Trump giving surprise remarks on the economy this morning after the economic data was released. Photo: Alex Wong/Getty Images

2. What you missed
  1. Twitter joins Facebook on the pain train: The social media giant's stock plummeted 20% today after reporting a drop in daily active users. Just like with Facebook yesterday, even mostly strong signs can disappoint a stock market that's gotten fat off stratospheric growth. By the numbers.
  2. The next big #MeToo case: CBS is already publicly promising to take seriously an expected Ronan Farrow article for The New Yorker on alleged sexual misconduct by Les Moonves, the chairman and CEO of the cable giant. Statement. ... And Shari Redstone says she's not the source.
  3. This summer could be our new normal: The deadly heat waves, floods and fires occurring from Japan to California and Europe have clear links to human-caused climate change, according to climate scientists, and this summer's abnormal weather is just the beginning. Where records have fallen.
  4. Trump vs. Michael Cohen: The president tweeted this morning that his former lawyer "is trying to make up stories ... to get himself out of an unrelated jam" regarding taxi cabs. Go deeper on Cohen's business background.
  5. What I'm reading: The National Prayer Breakfast has become an "international influence-peddling bazaar," the N.Y. Times' Ken Vogel and Elizabeth Dias report, noting the recent presences of Maria Butina and Ukrainian opposition leader Yulia Tymoshenko. Go deeper.
3. 1 beach read

Illustration: Axios visuals

"The King of Content: Sumner Redstone's Battle for Viacom, CBS, and Everlasting Control of His Media Empire," by Keach Hagey, media reporter for The Wall Street Journal (Harper Business):

  • From Chapter 13, "Remember: I'm in Control!" ... "Far from wanting to cultivate a successor, Sumner had become convinced he could run the entire show himself."
  • "Sumner believed that [some] divisions of Viacom, especially Paramount and Blockbuster, needed ... a swashbuckling, Murdoch-style CEO, ready to swoop into problem areas and fix them himself. He was eager for the role."

I'd love your ideas for next week's Beach Read: Please just reply to this email, or write me at mike@axios.com.

  • Please have your friends join our afternoon conversation by signing up for Axios PM here. Happy weekend!
Mike Allen