The US economy expanded at an annualized rate of 1.9% in the third quarter (0.47% from quarter to quarter). It is one tenth less than the growth rate recorded between May and June of this year and moves slightly more than 3.1% from the start of 2019. The data is known hours before the Federal Reserve adopts its decision on interest rates . The expectation is that a quarter of a point will be cut for a third time.
Wall Street expected a higher moderation of 1.6%. Although this first reading is better than expected, the US economy yields below 3.2% this year that President Donald Trump predicted in his Budget and promised when he arrived at the White House. There are several temporary factors that explain the slowdown, such as the start of the strike at General Motors or the problems that Boeing is dragging with the B737 MAX.
The Greatest Economy in American History!
– Donald J. Trump (@realDonaldTrump) October 30, 2019
But the slowdown also reflects a continued contraction in business investment due to global economic weakness and the uncertainty of the tariff battle with China. It also shows that the stimulus effect of the tax reduction also loses bellows. Trump, for his part, repeatedly accused the Fed of having slowed growth by taking the rate hike too far. The Republican, however, went before knowing the data to Twitter to celebrate the strength of the economy.
The indicator reflects that consumption moderated its growth from 4.6% in the spring to 2.9% during the summer. Despite this, it is considered a healthy rhythm. The activity in the real estate sector grew by 5.1%, so it had a positive effect on growth for the first time in seven quarters. The trade, however, slowed down. Exports grew 0.7% compared to 1.2% of imports.
With the exception of the fourth quarter of 2018, the US economy had not grown below 2% in more than three years. In any case, this rhythm is still considered solid and confirms that the expansion continues. Fed Chairman Jerome Powell has already made it clear that he sees no risk of recession. In spite of everything, it started to cut rates in July as a guarantee.