Trump struggling to achieve economic growth White House projected

Trump struggling to achieve economic growth White House projected

US economic growth slowed less than expected in the third quarter as a further contraction in business investment was offset by resilient consumer spending, further allaying financial market fears of a recession.

Business investment fell at a 3.0 percent rate in the third quarter, the sharpest contraction in more than three and a half years, after falling at a 1.0 percent rate in the second quarter.

On the flip side, manufacturing, which makes up 11 percent of the economy, has weakened further as a widely watched private gauge hit a 10-year low.

GDP expanded 1.9 per cent in the July-September period, well above economists' expectations but a notch lower than the second quarter's 2.0 per cent.

Later on Wednesday, the U.S. central bank was expected by many economists to wrap up its two-day policy meeting with an announcement of a cut in interest rates.

The stronger-than-expected growth rate was boosted by government and consumer spending, residential investment and exports.

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"Economic growth still remains better during the Obama years with 2.9% in 2014 before the oil price crash, and the best the Trump administration has been able to do is grow the economy 2.8% in 2018", Rupkey said.

"President Trump's trade war is doing significant damage to the economy", Zandi said. Consumer spending is being powered by the lowest unemployment rate in almost 50 years. But moderating job growth, ebbing consumer confidence and stalling wage gains are raising doubts about the consumer's resilience. These declines reflected trade tensions, which have weighed on capital expenditure, as well as cheaper oil.

Mark Zandi, chief economist at Moody's Analytics, said he does not have a recession in his forecast, but a downturn can't be ruled out, especially if the United States and China do not achieve at least a cease-fire that keeps further tariff hikes from going into effect.

Design problems at aerospace giant Boeing BA.N have also hurt business investment.

The rebound in exports blunted a surge in imports, leading to a narrowing in the trade deficit. Inventories trimmed GDP growth by only 0.05 percentage point in the third quarter compared to 0.91 percentage point in the second quarter.

"The consumer is no longer holding up the fort and that's too bad because business investment in structures subtracted 0.4 percentage points and investment in equipment was a 0.2 percentage point drag". "Even if growth miraculously soars 4.0% in the fourth quarter, it won't grow faster than 2.8% in 2019". Spending on homebuilding rebounded at a 5.1 percent rate after contracting for six straight quarters.

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