CNN has an article on its website about how the United States economy is growing more slowly than it was two years ago. The article mentions a recent Commerce Department news release where it was revealed that analysis of the United States Gross National Product for the third quarter of 2019 showed that growth was below two percent, the third time this has happened since 2018. Despite this, the article said the United States economy is still quite strong.
On the positive side of the report from the Commerce Department, spending was high overall both in the government and private sectors of the economy, which is generally an indication of good economic times. However, Americans spent less money on cars in the most recent financial quarter, and spending in the automotive industry is generally seen as a prediction of what direction the economy is heading. Americans also spent less on clothes, and this is likely because of tariffs on apparel coming into the country from China.
Analysts are predicting that the final months of 2020 will bring similar slow growth. There is also expectation that the Federal Reserve may cut interest rates to kick-start progress, but, of course, no one knows when this will happen if it does. Economists point out the economy is in its longest period of growth in United States history and that it’s hard to maintain such a streak.
One problem affecting the United States economy is that the world economy is weaker than it was two years ago, and this lowers the demand for United States exports. The dollar is very strong, and, while this is a good thing in many ways, it is bad for the manufacturing sector of the United States economy.
Fears of a recession
The larger question behind the Commerce Department report is whether the current slowdown in growth is just a blip on the radar screen or an indicator that a recession is on the horizon. Possible contributing factors to an economic downturn include the trade war with China, a decrease in corporate hiring and more.
On the bright side, wage growth, when adjusted for inflation, is looking very good. Furthermore, when analysts look closely at the months preceding the financial meltdown of 2008, they don’t see many similar patterns today. Overall, most analysts are taking a cautiously optimistic approach going into 2020, but that could change quickly.
Source: https://edition.cnn.com/2019/10/31/investing/economy-recession-slowdown/index.html
Dil Bole Oberoi
