The US economy slowed down at the end of 2018 and further deceleration could occur.
The gross domestic product – the widest range of goods and services produced in the United States – a 2.6 percent annual rate in the last three months of last year, the Department of Commerce said Thursday. This indicates a significant slowdown from the middle of the year, when sugar-boosted sugar increased growth to over 4 percent in a short time.
This year it starts worse. Many economists expect growth to fall below 2 percent in the first quarter, partly due to the partial government shutdown that began in December, which was extended in January.
The shutdown had another effect: a large number of government data were delayed, including G.D.P. a report that came out one month later than usual. This made it difficult for forecasters and policy makers to keep the economy in the key moment in the economy.
It is important to keep in mind the cooling economy. The slowdown in the fourth quarter was not as serious as many forecasters, and even so At the end of 2018, the loss of momentum was the best year in the decade of recovery from the great recession. And most economists do not expect recession this year, as the expansion of the current track becomes the oldest record.
"I think it's slow," he said Lewis Alexander, a leading American economist for Nomura. "I don't think this is" in one depth. "
Strong year – but how strong?
In Thursday's report, President Trump was given the right – I wish it was an asterisk.
Economic performance grew 3.1 percent in the fourth quarter compared to a year earlier. This is a political benchmark, as Mr Trump and his advisers have promised more or better growth that his predecessor never achieved in a full calendar year.
Mr Trump has still not achieved a clear victory. Another commonly used method for calculating annual growth is that of G.D.P. over the years, not just the fourth quarter of the year – the economy was just below the reference value of 2.9 percent. Don't be surprised if Democrats and Republicans issue dueling news, each of which highlights the number that best serves them.
It may be politically expected that growth will reach 3 percent, but economically little. The difference between 2.9 percent and 3 percent growth is negligible in one year, and the Ministry of Commerce is always reviewing the fourth quarter estimate in March.
And even if Mr Trump reached his target in 2018, he probably will not recognize the performance this year, when the economy will no longer be boosted by tax cuts and public spending. The Federal Reserve expects growth slowly increased to 2.3 percent in 2019, and many economists are even more pessimistic.
The signs of trouble have already grown
The clouds gathered for a while over the farm. The housing market slowed down considerably in 2018 as higher interest rates and declining affordability declined in construction and sales. Business investment weakened during the year. Retail sales fell unexpectedly in December, indicating that consumers are starting to retreat from the basics of recovery.
Economists point to several factors to explain the slowdown. The rising interest rates made it more expensive to buy homes, cars and other big tickets. The tax cuts signed by Mr Trump in 2017 helped to eliminate spending in early 2018, but these effects have faded. Commercial disputes have resulted in higher costs and greater uncertainty for many manufacturers, and they have been reluctant to invest.
"Trade uncertainty was a big factor," he said Joseph Song, Bank of America Merrill Lynch economist. – There was a lot of steam out of optimism around tax cuts.
The government stopped in trouble. Hundreds of thousands of federal workers have been financed, hundreds of thousands of jobs have been paid for, and interrupted air travel, among others. Consumer confidence plummeted.
The closure came too late to make a big difference in the fourth quarter, but this could mean a significant increase at the beginning of the year. Macroeconomic advisers, a forecasting firm, estimate that growth has slowed to 1.2 percent in the current quarter.
Weak growth would leave the United States with little buffer against the unexpected turn of bad news – for example, escalation of the commercial war with China, or another round of fiscal gambling around the ceiling of debt. The increasing proportion of economists expects a recession in 2020, if not sooner.
"The economy is already slowing down and there are a lot of reasons why it could slow down and make it vulnerable," said Alexander a Nomura. "You'd have to do a little less if you restrain your edge" in the recession.
It may not be shocking at all. If businesses and consumers are nervous about the economy, which can trigger a vicious circle of reduced spending and job cuts, he said Lindsey Piegza, Stifel Fixed Income Master.
"The recession is almost on us," he said. – This time not a bubble burst. The air is slowly released from the air balloon.
Is there any reason for optimism?
Not everyone is so pessimistic. Most economists believe that shutdown has caused very little long-term damage to the economy. Consumer confidence He returned in February as federal workers returned to work and the stock market fell back from the December decline. Employment growth has never suffered.
There are other reasons that the economy may be flexible. Trade tensions with China appear to have eased in recent weeks. The Federal Reserve supported plans to raise interest rates. The combination of low unemployment, rising wages and low oil prices helps consumers spend.
"Everything is based on a solid consumer boom," he said Michael Pearce Capital Economics.