ZCZC
BCN-13
US-ECONOMY-GDP-GROWTH-INDICATOR
US GDP grew 3.4 pct in Q3, held down by falling exports
WASHINGTON, Dec 22, 2018 (BSS/AFP) – US growth in the July-September
quarter was slightly slower than previously reported, dragged down by the
large drop in exports amid President Donald Trump’s multi-front trade wars,
according to government data released Friday.
With hundreds of billions of goods hit by retaliatory tariffs, US exports
fell by the largest amount since early 2009 at the height of the global
financial crisis.
Gross domestic product expanded by 3.4 percent in the third quarter rather
than the 3.5 percent previously reported, due in large measure to the 4.9
percent drop in exports, five-tenths more than the Commerce Department
originally estimated.
Goods exports dropped 8.1 percent, the biggest decline since the first
three months of 2015, according to the report, the third and final reading on
third quarter GDP.
Trump’s aggressive trade policies, and especially the tariff retaliation
from China, has impeded exports, with soybean sales nearly grinding to a
halt. The strong US dollar also has made American goods more expensive.
The dispute with China, even with a cease fire declared until March 1 for
negotiations, has created fears of slowing US and global growth, and caused
stock markets to retreat, with Wall Street wiping out all of the 2018 gains.
The sentiment is not helped by the Federal Reserve’s signal that it
expects to continue to raise the benchmark interest rate, albeit at a slower
pace.
“Moderation in growth is likely to be led by manufacturing … as
manufacturing is more exposed to weakening foreign demand,” said Jim
O’Sullivan of High Frequency Economics.
The smaller rise in consumer spending, largely the result of lower fuel
costs, also contributed to the downward revision to GDP growth, the Commerce
Department said.
Meanwhile, residential investment fell 3.6 percent, only partly offset by
1.1 percent gain in non-residential, or business, investment, data borne out
by the slowdown in home construction and sales.
Other data show fourth quarter growth is shaping up to be even more
sluggish. Purchases of durable goods — big ticket items like appliances,
vehicles and machinery — rose in November compared to October, but much less
than expected.
Orders were up 0.8 percent last month, less than half the increase
economists had forecast, according to a separate Commerce Department report.
That follows a big drop in October, and will drag on GDP in the final quarter
of 2018.
Excluding transportation goods, durable goods orders fell 0.3 percent
compared to October, and when defense is removed, the drop was 0.1 percent.
Orders are still 8.4 percent higher than they were through November 2017,
but have been on a declining trend for three months.
BSS/AFP/HR/1000