The United States economy registered a growth of 2.1% in the third quarter, slightly higher than forecast. But many economists argue that the country is slowing in the current quarter.
The Commerce Department said today that the growth rate of gross domestic product, total goods and services produced, in the July-September quarter slightly exceeded the initial calculation of 1.9%. A crucial reason is that companies did not reduce investments as planned.
The economy began the year with a spectacular growth of 3.1% of GDP, fueled largely by the already faded effects of tax cuts and the increase in fiscal spending. But many economists have calculated that it has slowed in the fourth quarter even at an annual rate of 1.4% or less. The most pessimistic forecast an annual rate of -1%, largely because the commercial war with China has led many companies to reduce their investments and inventories.
However, a relatively healthy Christmas shopping season is forecast given the increase in the employment rate and consumer spending.
In the July-September quarter, consumer spending grew at a robust rate of 2.9%. A continuation of the trend is expected as households have increasing incomes and an unemployment rate that is almost the lowest in half a century.
In the previous quarter, business investment fell at an annual rate of 2.7%, the second consecutive decline. Residential investment rose to 5.1% annually after six consecutive semesters of decline. Analysts attribute the rebound in part to the decline in mortgage rates.
For the entire year, economists forecast a GDP growth of 2.3%, compared to the 2.9% growth in 2018 that was driven by the 1.5 trillion tax cut of President Donald Trump and billions of dollars in additional expenses for the armed forces and internal programs.
By 2020, a growth of around 2% is expected. This is approximately the annual average since 2009, when the Great Recession ended. But it is far from the 3% rate that Trump promised to achieve with his measures of tax cuts, deregulation and US policy First.