The growth rate of the US economy slowed much less than anticipated, and many experts are keeping the end of the year growth rate estimates at around three percent. Reuters reports that while third-quarter growth slowed and continued to lose inertia during the start of the fourth quarter, the US economy should still have enough momentum to finish the year ahead. The US Secretary of Commerce even pointed out on twitter:
— Sec. Wilbur Ross (@SecretaryRoss) November 28, 2018
Although corporations enjoyed a decent third quarter, household spending saw a smaller than expected increase. According to Bloomberg, spending in this sector grew by 3.6 percent — instead of the anticipated four percent. Although the slowdown was marginal, household spending makes up the majority of the economy, making it one of the most significant markers in measuring economic health.
After the information was released on Wednesday, some experts feared that the Federal Reserve will continue to raise interest rates. So far in 2018, Fed chairman Jerome Powell has implemented three rate increases, although these moves have drawn scorn from President Trump. If Trump continues to fight against the rate hikes, Powell may have no choice but to keep interest rates at their current level.
So great that oil prices are falling (thank you President T). Add that, which is like a big Tax Cut, to our other good Economic news. Inflation down (are you listening Fed)!
— Donald J. Trump (@realDonaldTrump) November 25, 2018
The current growth rate is expected to slow further in the fourth quarter, and continue down in 2019. Much of this year’s GDP growth is tied to temporary economic policies written by the Trump White House, but these programs are scheduled to end next year. Coupled with the ongoing trade spat with China and a weakening housing market, the outlook for 2019’s growth is bleak.
“A trade war remains the biggest downside risk,” said PNC Financial Services’ chief economist Gus Faucher, while speaking to Reuters.
The current economic dispute with Beijing, which has resulted in billions of dollars worth of tariffs placed on US goods, has already hit several US industries hard. Many firms anticipated the tariffs and “front-loaded” their exports to China, causing the export rate to skyrocket during the first half of the year. That rate has now slowed, and companies are feeling the squeeze. As exports decrease, the US import rate has grown. Currently, the rate is sitting at 1.78, which is the highest it’s been in more than 30 years. According to Reuters, the disparity between imports and exports shaved close to two percent off the “GDP’s growth rate.”