63 F
Fort Worth
Tuesday, November 24, 2020
Government US economy grows at modest 1.9% rate in third quarter

US economy grows at modest 1.9% rate in third quarter

Other News

Exxon’s oil slick

Exxon Mobil is slashing its capital spending budget for 2020 by 30% due to weak demand caused by the COVID-19 pandemic and a market...

Folk music’s Mark Twain: 7 Essential tracks from John Prine,

NEW YORK (AP) — Some people, the songs just come out of them. For nearly half a century, they tumbled out of John Prine...

Tarrant County records another COVID-19 death

Tarrant County Public Health (TCPH) on Wednesday, April 8 reported that a resident of Euless has died as the result of the COVID-19 virus....

Tradition stymied: A year unlike any since WWII for Augusta

The Masters is so intertwined with Augusta, they added an extra day to spring break.You see, the first full week of April isn't just...

WASHINGTON (AP) — The U.S. economy slowed to a modest growth rate of 1.9% in the summer as consumer spending downshifted and businesses continued to trim their investments in response to trade war uncertainty and a weakening global economy.

The Commerce Department reported Wednesday that the July-September performance for the gross domestic product, the economy’s total output of goods and services, was just below the 2% rate of growth in the second quarter .

Economists had been forecasting a much bigger slowdown with fears GDP could slump to 1.4% or less given a number of headwinds.

Still, the GDP gain was far below the 3%-plus increases that President Donald Trump has set as a benchmark to demonstrate that his policies are succeeding in lifting the economy above the modest 2.2% growth of the Obama years.

Consumer spending, which accounts for 70% of economic activity, grew at a solid 2.9% rate in the third quarter, but it was still a slowdown after a 4.6% surge in the second quarter.

There were signs the trade battle and weak global growth were taking a toll as businesses cut back on their investment spending for a second straight quarter in the face of rising uncertainty. Business investment in structures plunged at a 15.3% rate in the third quarter after a sharp 11.1% drop in the second quarter.

Residential investment, which had been falling for six quarters, finally saw an increase, rising at a 5.1% rate, a gain that reflected the impact lower mortgage rates from the Federal Reserve’s rate cuts were having on sales and construction plans.

Government spending slowed to a growth rate of 2%, down from a 4.8% gain in the second quarter, with federal spending and state and local government spending all slowing.

The trade deficit, which has widened as Chinese retaliatory tariffs have hurt farm sales, trimmed GDP growth by about 0.1 percentage-point in the third quarter.

Economists believe growth could slow further in the current October-December quarter and into next year, given all the economic risks.

“We see GDP momentum softening … as global headwinds, lingering policy uncertainty and squeezed profits erode employment growth and confidence,” said Gregory Daco, chief U.S. economist at Oxford Economics.

Growth this year is forecast to come in around 2.3%, down from 2.9% last year. Many analysts are forecasting a further slowdown to GDP growth of around 1.5% in 2020. That would be a disappointment to the president, who has repeatedly proclaimed that his economic policies featuring tax cuts, deregulation and tough enforcement of trade agreements would lift the country out of the doldrums of the slowest economic expansion in the post World War II period.

Growth last year was boosted by Trump’s $1.5 billion tax cut passed in 2017 and billions of dollars in extra government spending approved last year.

Without that support, economists had forecast a slowdown this year. They also say that Trump’s trade war with China, by disrupting supply chains and hurting business confidence, will shave about a half-percentage point from the already slower GDP figure.

The president, however, has blamed the Federal Reserve for the weaker growth, calling Fed officials “boneheads” for raising rates four times last year and being slow to cut rates this year.

The central bank is expected to slash its key policy rate for a third time when this week’s meeting ends on Wednesday. Economists believe without the Fed’s efforts to lower rates, the economy might already be in a recession.

Most analysts think the current record-long expansion, now in its 11th year, will avoid a downturn in 2020, a presidential election year, but growth will be far below the 3% Trump has promised to achieve.

Mark Zandi, chief economist at Moody’s Analytics, said he does not have a recession in his forecast, but a downturn can’t be ruled out, especially if the United States and China do not achieve at least a cease-fire that keeps further tariff hikes from going into effect. That would slow GDP growth even further.

“President Trump’s trade war is doing significant damage to the economy,” Zandi said. “If the economy slows even more than I am anticipating, I think that could ignite a recession.”


close






Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.

Latest News

Tarrant County DA’s office changing how it handles misdemeanor marijuna cases

The Tarrant County Criminal District Attorney’s Office is changing how it handles misdemeanor marijuana cases. The Tarrant County  Criminal District Attorney’s Office on Monday, Nov....

Arlington selects new police chief from Baltimore department

Col. Al Jones, a 25-year veteran of the Baltimore County Police Department, has been appointed the new police chief of the the City of...

GM flips to California’s side in pollution fight with Trump

DETROIT (AP) — General Motors says it will no longer support the Trump administration in legal efforts to end California’s right to set its...

Fort Worth out of running for Space Command HQ, San Antonio still in

A Texas city could still host the U.S. Space Command headquarters, but it’s not going to be Fort Worth. The U.S. Air Force has narrowed...

U.S. Rep. Kay Granger says it’s time for Donald Trump to “move on” as most Texas Republicans remain silent

U.S. Rep. Kay Granger, a high-ranking member of Texas' congressional delegation who is respected among her peers, said Friday she has "great concerns" about...