On The Money: Trump takes victory lap on strong economic numbers | Trump keeps foes, friends guessing on trade policy | Housing regulator under investigation for alleged sexual harassment

Happy Friday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL: The U.S. economy expanded at a 4.1 percent rate in the April-to-June quarter, the highest level in nearly four years and the best showing for President Trump, the Commerce Department said on Friday. 

The gross domestic product (GDP) report was the strongest since the third quarter of 2014, when growth hit a 5.2 percent pace.

{mosads}

Trump administration officials said it was a sign that the economy could expand at a 3 percent annual rate for the first time since 2005, when it grew at a 3.3 percent pace.

The April–June figure, which was expected to come in around 4.2 percent, easily eclipsed the 2.2 percent annual growth during the first three months of the year.  The Hill’s Vicki Needham breaks down the report here.

President Trump took a victory lap at the White House after the report was released, touting his tax and regulatory policies as drivers of the best economic growth in nearly four years.

In a speech at the White House, Trump said the country is growing “at the amazing rate” and that “we’re on track to hit the highest annual average growth rate in over 13 years.”

Trade deals will further help the economy and “we’re going to go a lot higher than these numbers and these are great numbers,” said Trump, surrounded by top administration officials on the South Lawn.

Even so, economists have doubted the sustainability of the second quarter growth rate. Analysts have attributed the massive spike in growth to one-time increases in consumer spending driven by tax cuts, and the global rush to buy U.S. soybeans before tariffs kick in. Vicki and I explain that here.

Reactions:

• “Everywhere we look, we’re seeing the effects of the economic miracle all across America.” — President Trump
• “If we look at the data today, we can see the proof in the pudding that the president’s policies are working. And it’s not just in the top line, it’s in the details.” — Council of Economic Advisers Chairman Kevin Hassett.
• “This is a boom that will be sustainable as far as the eye can see. It is no one shot-effort.” — National Economic Council Director Larry Kudlow.
• “Touting GDP numbers to claim that the Republican tax law is improving the lives of all Americans is a poor interpretation of the current state of our economy.” — Sen. Martin Heinrich (D-N.M.), ranking member of the Joint Economic Committee.
• “Armed with a competitive tax code, bold reforms to regulations, and encouraging news this week on trade, our economy is booming.” — Rep. Kevin Brady (R-Texas), chairman of the House Ways and Means Committee.

LEADING THE DAY

Trump keeps friends and foes guessing on trade: Where is President Trump’s trade policy going?

That was the question being asked in Washington and beyond after the president offered conciliatory remarks in a Wednesday news conference and then returned to a harder rhetorical line while visiting an Illinois steel plant on Thursday.

Trump seemed to de-escalate from the growing threat of an all-out trade war with Europe when he spoke Wednesday alongside European Commission President Jean-Claude Juncker in the White House Rose Garden.

But by the following afternoon, Trump was insisting that “we’re putting the world’s trade cheaters on notice.”

Trump’s improvisational style makes it next to impossible to guess where he goes next — something that could be a problem for everyone from American workers to foreign investors. The Hill’s Niall Stanage explains why here.

Senate passes tariff-relief bill (no, not those tariffs): The Senate cleared legislation on Thursday that would eliminate duties on imported raw materials used for production that aren’t readily available in the United States.

The Miscellaneous Tariff Bill Act, which passed the House in January, was approved by a voice vote as the chamber wrapped up its work for the week.

Because the Senate amended the legislation, it will need to bounce back to and be passed again by the House — which left town on Thursday until September — before it can head to President Trump’s desk.

The bill comes as Trump’s broader trade policies have rankled Republicans on Capitol Hill, who worry steep tariffs on steel and aluminum imports will roil the economy months before a midterm election. Those tariffs are unaffected by this bill.

NEXT WEEK’S NEWS, NOW

• The House is out for the next six weeks, but the Senate will still be in for most of August after Majority Leader Mitch McConnell (R-Ky.) cancelled the chamber’s recess. That means we could see some movement on key financial nominations throughout the month.
• The Senate Banking Committee could vote on Kathy Kraninger’s nomination to be director of the Consumer Financial Protection Bureau as soon as next week, while Federal Reserve nominees Richard Clarida, Michelle Bowman, and Marvin Goodfriend are still pending before the full Senate. Clarida and Bowman appear safe for confirmation, but Goodfriend’s nomination appears to be doomed.
• The Federal Reserve’s policy-making committee will meet next Tuesday and Wednesday for the first time since raising interest rates one month ago. The Federal Open Markets Committee will likely discuss the recent second-quarter growth report and the recent developments in trade policy, but isn’t expected to raise rates until September
• We’ll be keeping an eye on trade talks between the U.S. and E.U. in the wake of Wednesday’s agreement to pursue a free-trade deal. The E.U. pledged to import more U.S. soybean and liquified natural gas, so we’ll see how quickly they move toward doing so and for any progress toward a broader agreement to scrap tariffs.

GOOD TO KNOW

• The Securities and Exchange Commission (SEC) announced Thursday that it would not approve what would have been the first-ever exchange-traded fund (ETF) to track Bitcoin.
• The Consumer Finance Protection Bureau, after pausing the policing of financial firms under Trump-appointed leadership, has restarted enforcement using a more “collaborative approach,” according to The Wall Street Journal.
• The Committee for a Responsible Federal Budget breaks down today’s GDP report and argues why it won’t be sustainable. 
• Mel Watt, the powerful regulator of mortgage giants Fannie Mae and Freddie Mac, is under investigation for alleged sexual harassment of an employee, according to Politico.
• The Communications Workers of America (CWA) is targeting Republican lawmakers and AT&T in a new advertising campaign aimed at highlighting the telecom giant’s job cuts after receiving a boost from the GOP’s tax law.

ODDS AND ENDS

• Starbucks officials said closing its stores nationwide for an afternoon in May to conduct anti-bias training hurt its sales over the past quarter.
• A top Office of Management and Budget (OMB) official said Thursday that the agency has completed its first review of a proposed rule to implement the GOP tax law under a process agreed to with the Treasury Department in April.
• A key member of the House Financial Services Committee wants to see lawmakers focus next year on oversight of the “muddied and fairly opaque” markets for initial coin offerings and trading digital tokens, according to Bloomberg.

Recap the week with On The Money:

• Monday: Brady to share tax cut 2.0 outline with House GOP | GOP lawmaker proposes carbon tax | Russia summit puts spotlight on Trump tax returns
• Tuesday: Trump offers $12B in aid to farmers hit by tariffs | Lawmakers blast plan | GOP chair outlines phase two of tax cuts | New bipartisan Russia sanctions in the works | Fyre festival founder settles with feds
• Wednesday: Trump, EU agree to work toward ‘zero tariffs’ | Mulvaney asks for patience with Trump trade policy | House panel approves $5B for border wall
• Thursday:  White House takes victory lap on Europe trade talks | Facebook stock plummets in biggest one-day drop | Trump threatens sanctions on Turkey over jailed pastor | Farm groups fear Trump aid won’t fix trade damage