• Home
  • Metro Asian News
  • Misc Asia
  • Lifestyle
  • Business
  • Art
  • Health
  • Eat Out
  • Events
  • Podcast
ABOUT
Advertise in GAT
Contact us
Tuesday, February 7, 2023
Georgia Asian Times
International Insurance of Georgia
  • Home
  • Metro Asian News
  • Misc Asia
  • Lifestyle
  • Business
  • Art
  • Health
  • Eat Out
  • Events
  • Podcast
  • Login
No Result
View All Result
  • Home
  • Metro Asian News
  • Misc Asia
  • Lifestyle
  • Business
  • Art
  • Health
  • Eat Out
  • Events
  • Podcast
No Result
View All Result
Georgia Asian Times
No Result
View All Result
  • Home
  • Metro Asian News
  • Misc Asia
  • Lifestyle
  • Business
  • Art
  • Health
  • Eat Out
  • Events
  • Podcast
Home Business

U.S. economy growing moderately in fourth quarter; likely missed Trump’s 3% goal in 2019

Georgia Asian Times by Georgia Asian Times
January 30, 2020
in Business, Headline
Share on FacebookShare on Twitter

Washington DC, Jan 30, 2020 – The U.S. economy likely maintained a moderate pace of growth in the fourth quarter, and probably again fell short of attaining the Trump administration’s coveted but elusive 3% annual growth target because of slumping business investment amid damaging trade tensions.

The Commerce Department’s snapshot of gross domestic product on Thursday will likely show the Federal Reserve’s three interest rate cuts in 2019 helped to keep the longest expansion in history, now in its 11th year, on track and avert a downturn.

Growth is, however, slowing as the stimulus fades from the White House and Republicans’ huge tax reductions in 2018, a package President Donald Trump had predicted would lift growth persistently above 3%. So far it has fallen short of that goal.

The report comes on the heels of the U.S. Federal Reserve deciding to keep rates unchanged. Fed Chairman Jerome Powell told reporters on Wednesday the U.S. central bank expected “moderate economic growth to continue” but also nodded to some risks, including the recent coronavirus outbreak in China.

AD: High Museum of Atlanta

The Trump administration’s 18-month-long trade war with China last year fueled fears of a recession. Though the economic outlook has improved with this month’s signing of a Phase 1 deal with Beijing, economists do not see a boost to the economy as U.S. tariffs remained in effect on $360 billion of Chinese imports, about two-thirds of the total.

“The economy has clearly slowed, but we are not barreling toward a recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The economy is coming off its sugar high in 2019 so is not surprising that we are settling back into the growth rates that we saw prior to the fiscal stimulus.”

Gross domestic product probably increased at a 2.1% annualized rate in the fourth quarter as lower borrowing costs encouraged purchases of motor vehicles, houses and other big ticket items, according to a Reuters survey of economists. A smaller import bill and more government spending are also seen keeping GDP growth at the same pace logged in the third quarter.

The forecast was, however, made before Wednesday’s advance reports showing a sharp widening in the goods trade deficit in December as well as a drop in wholesale inventories. Retail inventories were unchanged last month. The data prompted some economists to cut their fourth-quarter GDP growth estimates by as much as five-tenths of a percentage point to as low as a 1.4% rate.

Growth estimates for 2019 are converging around 2.5%, which would be slower than the 2.9% notched in 2018. Economists estimate the speed at which the economy can grow over a long period without igniting inflation at around 1.8%.

The White House claimed that slashing the corporate tax rate to 21% from 35%, as well as shrinking the trade deficit would boost annual GDP growth to 3.0% on an sustainable basis. Economists have long disagreed, pointing to structural issues like low productivity and population growth. Some also argued that there was historically not a very strong relationship between corporate tax rates and business investment.

TOUGH TASK

“If you are trying to get to 3% in an economy in its 11th year of recovery that’s a tough task,” said Sung Won Sohn, business economics professor at Loyola Marymount University in Los Angeles. “There is a lot of uncertainty. Even though we have this initial trade agreement, I think there will be more trade wars after the (U.S. presidential) election.”

Fed Chair Powell also said the risks from trade tensions remained and businesses were adopting a “wait and see attitude.”

Business investment likely contracted further in the fourth quarter after declining by the most in nearly four years in the July-September period. Trade tensions have eroded business confidence and weighed on capital expenditure.

With confidence among chief executive officers remaining low in the fourth quarter after dropping to a 10-year low in the prior quarter, a rebound is unlikely soon.

Business investment is also seen pressured by Boeing’s suspension this month of the production of its troubled 737 MAX jetliner, which was grounded last March following two fatal crashes. Boeing on Wednesday reported its first annual loss since 1997.

Though growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, is expected to have moderated after a brisk 3.2% rate in the third quarter, the pace was probably enough to offset the drag from business investment.

Support is also expected from a sharp drop in imports in the fourth quarter, in part because of U.S. tariffs on Chinese goods, which compressed the trade deficit.

Economists believe the smaller trade deficit probably added as much as 1.9 percentage points to GDP growth in the fourth quarter. That estimate could, however, be too high given the rebound in imports in December reported in Wednesday’s data.

But the overall decline in imports in the fourth quarter probably resulted in businesses depleting inventories in warehouses. A 40-day strike at General Motors also weighed on motor vehicle inventories.

Goldman Sachs estimates that overall business inventories increased at a $2.0 billion rate in the fourth quarter, decelerating sharply from a pace of $69.4 billion in the July-September period. That means inventory investment chopped 1.4 percentage points from GDP growth in the fourth quarter. – Reuters

Previous Post

China virus deaths rise to 170 as hit to global economy looms

Next Post

Sunny Park honored with prestigious award by Georgia Public Policy Foundation

Georgia Asian Times

Georgia Asian Times

Related Posts

Google hopes ‘Bard’ will outsmart ChatGPT, Microsoft in AI
Business

Google hopes ‘Bard’ will outsmart ChatGPT, Microsoft in AI

February 7, 2023
Worker pay rises strongly as businesses fight to fill jobs
Business

US adds a surprisingly strong 517,000 jobs despite Fed hikes

February 3, 2023
Biden goes after fees levied for flights, hotels and tickets
Business

Biden goes after fees levied for flights, hotels and tickets

February 2, 2023
Here’s what the Feds Quarter Point interest rate hike means for you
Business

Here’s what the Feds Quarter Point interest rate hike means for you

February 1, 2023
Anti-Asian hate ‘runs the gamut,’ racist Yelp reviews show
Business

Anti-Asian hate ‘runs the gamut,’ racist Yelp reviews show

February 1, 2023
Radioactive capsule that fell off truck found in Australia
Business

Radioactive capsule that fell off truck found in Australia

February 1, 2023
Next Post

Sunny Park honored with prestigious award by Georgia Public Policy Foundation

Signup Free E-Newsletter

Upcoming Events

Feb 18
6:00 pm - 11:00 pm

Spring Festival 2023

View Calendar
Logo

 

CONTACT US

Follow Us

MOST INFLUENTIAL

GAT 25 Most Influential Asian Americans Gala celebrates Asian voice

GAT 25 Most Influential Asian Americans Gala celebrates Asian voice

July 18, 2022

Video highlights of GAT 25 Most Influential Asian Americans in Georgia

July 17, 2022

2022 GAT 25 Most Influential Asian Americans in Georgia-Awards Gala

July 17, 2022

LINKS OF INTEREST

ATL Asian Film Festival

GAT on Facebook

Lunar New Year of Rabbit - GAT Special Section
  • Contact Us
  • Advertise in GAT
  • ABOUT

© 2023 Georgia Asian Times - Empowered by 8SOL. Managed by Arckopolis.

No Result
View All Result
  • Home
  • Metro Asian News
  • Misc Asia
  • Lifestyle
  • Business
  • Art
  • Health
  • Eat Out
  • Events
  • Podcast

© 2023 Georgia Asian Times - Empowered by 8SOL. Managed by Arckopolis.

Welcome Back!

Sign In with Google
OR

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?