Please ensure Javascript is enabled for purposes of website accessibility
Thanks to Consumers, US Economy Is Rising Steadily if Slowly
gvw_ap_news
By Associated Press
Published 5 years ago on
August 29, 2019

Share

WASHINGTON — The U.S. economic landscape would look even bleaker if not for America’s consumers.
The economy slowed in the spring, and many analysts think the weakness will continue in the months ahead. Yet consumer spending, which drives about 70% of growth, accelerated in the April-June quarter at the fastest pace in nearly five years.

The slowdown could complicate Trump’s hopes that a surging economy will enhance his 2020 re-election hopes. He is counting on rising wages and low unemployment to keep consumers spending.
Households are showing a willingness to keep spending even in the face of rising anxiety about a possible forthcoming recession. At the same time, though, business investment is weakening in the face of uncertainties created by the increased taxes that President Donald Trump has imposed on hundreds of billions of dollars’ in imports — goods that many American businesses rely upon.
Despite the resilience consumers are showing, the overall economic picture is weakening. The gross domestic product, the broadest gauge of economic health, advanced at a moderate 2% annual rate in the April-June quarter, the government said Thursday, down from a 3.1% gain in the first quarter. Thursday’s revised figure for last quarter was slightly lower than the government’s initial estimate of 2.1% annual growth.
The slowdown could complicate Trump’s hopes that a surging economy will enhance his 2020 re-election hopes. He is counting on rising wages and low unemployment to keep consumers spending.

Economists Estimate GDP Will Slow to Around 2.2 Percent and Then Drop

The president has pledged to achieve annual growth at annual rates of 3% or better. But economists generally foresee GDP slowing sharply after hitting 2.9% last year. The general expectation is that annual growth in the current July-September quarter is weakening to around 1.8% and that the pace in the October-December quarter will be similar.
For all of 2019, economists estimate that GDP will slow to around 2.2 percent and then drop to below 2% in 2020 as the economy faces headwinds from the global slowdown and the uncertainties from Trump’s escalating trade war with China.
The biggest factor in the government’s downward revision for the April-June quarter was a smaller gain in spending by state and local governments and fewer export sales. American exports have been hurt by the retaliatory tariffs China and other countries have imposed on U.S. soybeans and other products. That drop was offset by the increase in consumer spending to a rate of 4.7%, up from an initial estimate of 4.3%.
Business investment spending turned negative in the second quarter, falling at a 0.6% annual rate, which many economists believe occurred because of the trade wars increasing business uncertainty about the future.
A slowdown in annual growth to 2.2% would be near the 2.3% annual gains seen since the decade-long expansion began in June 2009. The recovery became the longest in U.S. history last month but analysts have begun to worry whether trade wars, plunging stock markets and such factors as sluggish factory output and a tepid housing market might be signaling growing risks of a recession.

74% of Business Economists Now Believe a New Recession Will Begin By the End of 2021

Trump contends that his economic program of tax cuts, deregulation and get-tough trade policies will produce sustained GDP growth of 3% a year or better, a big improvement on the 2.3% gains of the Obama years.

“If the president continues to ratchet up the rhetoric and his tariffs on China, it will continue to unnerve business people who are already being more cautious with their investment plans. The risks of going into a recession are high if the president keeps escalating his trade war.” Mark Zandi, chief economist at Moody’s Analytics
Private economists generally disagree. Most say they believe that growth accelerated last year because of Trump’s tax cuts but that this boost is now fading. They are forecasting that growth will slow even further next year and they say a recession can’t be ruled out.
A survey last week found that 74% of business economists now believe a new recession will begin by the end of 2021 with 38% saying the downturn will start even sooner, in 2020.
Mark Zandi, chief economist at Moody’s Analytics, said he is not forecasting a recession in the next 18 months but he said one can’t be ruled out with the greatest risk coming from Trump’s trade war with China.
“If the president continues to ratchet up the rhetoric and his tariffs on China, it will continue to unnerve business people who are already being more cautious with their investment plans,” Zandi said. “The risks of going into a recession are high if the president keeps escalating his trade war.”
In a separate report Thursday, the Labor Department said the number of Americans filing claims for unemployment benefits, seen as a good proxy for layoffs, rose by 4,000 last week to a still-low 215,000. Economists believe this weekly indicator will be one of the first signs if the economy is starting to falter.

DON'T MISS

Young Republicans on Why Their Party Isn’t Reaching Gen Z (And What They Can Do About It)

DON'T MISS

JD Vance Puts the Con in Conservatism

DON'T MISS

UC Merced Finally Annexed Into City Limits After Two Decades

DON'T MISS

Donors Challenged Fresno Pacific to Match Their $1.5M Gift. Was the Goal Reached?

DON'T MISS

Garlic, Curry, Fresh Corn – Would You Scream for This Ice Cream?

DON'T MISS

Meet Po: A Gentle Superhero Looking for a Home

DON'T MISS

Largest Housing Provider for Migrant Children Engaged in Pervasive Sexual Abuse, US Says

DON'T MISS

25 Million Watched Trump’s Speech at the RNC on Thursday

DON'T MISS

City Wants Hard Reset on Art Hop. Don’t Expect Food Trucks or Vendors in August.

DON'T MISS

More Victims Come Forward in Dinuba Sex Assault Case

UP NEXT

911 Systems Disrupted in at Least 3 States

UP NEXT

Mourners Gather for Funeral of Man Slain at Trump Rally in Pennsylvania

UP NEXT

Widespread Technology Outage Disrupts Flights, Banks, Media Outlets and Companies Around the World

UP NEXT

Founder of Fandango Dies After Plunge From Manhattan Hotel

UP NEXT

Rally Shooter Had Photos of Trump, Biden and Other US Officials on His Phone, AP Sources Say

UP NEXT

The Last Cards Have Been Dealt as the Iconic Mirage Closes Its Doors on the Las Vegas Strip

UP NEXT

Visalia Man Faces Third Strike for Serial Burglary

UP NEXT

US Army Honors Nisei Combat Unit That Helped Liberate Tuscany From Nazi-Fascist Forces in WWII

UP NEXT

Majority of Americans, Including Republicans, Back Biden’s Supreme Court Term Limit Plan

UP NEXT

Fresno Police Arrest Suspect in 2023 Shooting Death

Donors Challenged Fresno Pacific to Match Their $1.5M Gift. Was the Goal Reached?

19 hours ago

Garlic, Curry, Fresh Corn – Would You Scream for This Ice Cream?

19 hours ago

Meet Po: A Gentle Superhero Looking for a Home

19 hours ago

Largest Housing Provider for Migrant Children Engaged in Pervasive Sexual Abuse, US Says

1 day ago

25 Million Watched Trump’s Speech at the RNC on Thursday

1 day ago

City Wants Hard Reset on Art Hop. Don’t Expect Food Trucks or Vendors in August.

1 day ago

More Victims Come Forward in Dinuba Sex Assault Case

1 day ago

‘Twisters’ Is the Long-Awaited Sequel to ‘Twister.’ Where to See It in Fresno.

1 day ago

Fresno Offers Free Movie Tickets for Seniors to Beat the Heat

1 day ago

Mexican President Calls Donald Trump ‘a Friend’ and Says He’ll Warn Him Against Closing Border

1 day ago

Young Republicans on Why Their Party Isn’t Reaching Gen Z (And What They Can Do About It)

Polls show that two-thirds of voters aged 18-24 say they don’t identify with the G.O.P. We asked young Republicans why. – By The New Y...

12 hours ago

Photo of President Donald Trump
12 hours ago

Young Republicans on Why Their Party Isn’t Reaching Gen Z (And What They Can Do About It)

14 hours ago

JD Vance Puts the Con in Conservatism

17 hours ago

UC Merced Finally Annexed Into City Limits After Two Decades

19 hours ago

Donors Challenged Fresno Pacific to Match Their $1.5M Gift. Was the Goal Reached?

19 hours ago

Garlic, Curry, Fresh Corn – Would You Scream for This Ice Cream?

19 hours ago

Meet Po: A Gentle Superhero Looking for a Home

1 day ago

Largest Housing Provider for Migrant Children Engaged in Pervasive Sexual Abuse, US Says

1 day ago

25 Million Watched Trump’s Speech at the RNC on Thursday

MENU

CONNECT WITH US

Search

Send this to a friend