The U.S. economy grew at an annualized rate of 4.1% in the second quarter, its fastest clip since 2014, thanks to strong exports and spending by consumers and governments, according to a first estimate of GDP from the Commerce Department's Bureau of Economic Analysis.

While the GDP number came in slightly under economists' expectations of 4.2%, the rate was a big jump over the revised 2.2% expansion in the first quarter of 2018.

President Donald Trump hailed the report in an appearance at the White House with his top economic advisers.

"These numbers are very, very sustainable. This isn't a one time shot," Trump said.

"The composition of second-quarter GDP growth is solid and also bodes for another strong third quarter," Ward McCarthy, Jefferies LLC chief financial economist wrote in a note. "There are no logical reasons to expect this expansion to end any time soon."

Even weakness in residential investment, which was down 1.1% after a 3.4% drop in the first quarter, and a 1% decline in inventories, may set up the economy for third-quarter growth, wrote James Knightley, chief economist at Dutch bank ING, in a note.

"Inventories will be rebuilt after such a sharp run down, while the strength in housing demand means a rebound in residential construction is only a matter of time away," he wrote.

Watching the Fed

Knightley added that the U.S. economy is still poised to grow 3% in 2018 following the 2017 tax overhaul, which may have helped boost household incomes and corporate cash flows.

However, economists at Wells Fargo Securities said they expected that tax law would only provide a "one-time boost to overall economic growth."

"Today's strong figure may represent the 'high watermark' for U.S. GDP growth," they wrote.

Markets will be watching the Federal Reserve's reaction to inflation indicators after it holds its policy meeting next week. Core personal consumption expenditures, which exclude food and energy prices, were up 2.0% in the second quarter, after rising 2.2% in the first quarter, the bureau said. Core PCE is the Fed's preferred index for measuring inflation.

"[W]e continue to look for a September and a December rate hike with the Federal Reserve potentially providing a more forceful statement of intent at next Wednesday's FOMC meeting," Knightley wrote.

The Fed raised its benchmark interest rate at its June meeting, and has signaled it may hike rates twice more this year if warranted by inflation and unemployment data.

The S&P 500 Index was down 0.24% as of 11:15 a.m. ET. Yields on 10-year Treasurys were down 1 basis point to 2.967%, while the dollar was little changed against the euro.