Can the U.S. Economy Grow Above +3%?

Late last week, in a third measure taken by the Commerce Department, U.S. GDP in Q2 came in strong. The world's largest economy grew at a +4.6% annual rate, up +0.4% from a +4.2% second estimate. Economists forecasted +4.6%. This was an in-line final number.

Better retail sales and foreign trade numbers delivered an upward revision the third time around.

• Household spending climbed +2.5% in Q2, following +1.2% in Q1.

• Exports increased +11.1% in Q2, compared with a -9.2% decline in Q1.

Investor focus now shifts to whether the U.S. economy can sustain GDP growth closer to +3% over the remainder of the year.

Do I think the U.S. economy can grow above 3%?

The answer is yes. At this point, the U.S. unemployment rate can break below 6%. Added new jobs should arrive with a bump in income for those already employed, too. At this stage in a mature business cycle, there are more job openings. Existing employers must pay up, or risk losing their most valued employees. We’ve seen evidence of that already.

What might be one headwind to a 3% growth rate? A 5% stronger U.S. dollar in Q3 and Q4 could take up the consumption of imports.

Add a strong U.S. stock market to a strong U.S. jobs market. The sour fact that the rest of the world is struggling might be shrugged off -- on the way to a 3% U.S. growth rate.