US economy stronger than predicted
Growth in the U.S. economy was stronger than expected in the third quarter, and most forecasts call for continued solid growth in 2020, although at a slower pace than 2018-2019.
The nation’s gross domestic product (GDP) grew at a rate of 1.9 percent in the third quarter, down slightly from 2 percent in the second quarter, according to the U.S. Department of Commerce.
Last quarter saw higher-than-expected consumer spending, exports, housing investment and government spending. Still, consumer and government spending slowed from the previous quarter, and investment in nonresidential property declined. Consumer spending rose 2.9 percent in the third quarter, a slower rate of growth than the very high 4.6 percent growth rate in the second quarter.
Personal income rose 0.1 percent in July, 0.5 percent in August and 0.3 percent in September, according to the Commerce Department’s Bureau of Economic Analysis. Unemployment remains at a 50-year low.
In October, the Federal Reserve cut the federal-funds rate for the third time since late July, citing a slowdown in business spending.
The Conference Board, a business think tank, in October forecast GDP growth of 1.9 percent in the fourth quarter of 2019, resulting in annual GDP growth of 2.3 percent for 2019, and predicted annual GDP growth of 2 percent in 2020. The board predicts consumer spending will grow 2.6 percent in 2019 and 2.7 percent in 2020.
The board warned that weakening business confidence and falling manufacturing confidence will temper growth in the coming quarters, offset by robust consumer confidence.
The U.S. economy will continue to expand into 2020, although at a slower pace, according to the National Association for Business Economics (NABE), which identifies the U.S.-China trade dispute as a key downside risk. The NABE consensus among 54 economic forecasters is that GDP growth will fall to 1.8 percent in 2020, down from 2.9 percent in 2018 and 2.3 percent in 2019.
Globally, economic growth is expected to slow to 2.9 percent in 2019 and 3 percent in 2020, according to an October report by the Organization for Economic Cooperation and Development. That compares with a growth rate of 3.6 percent in 2018.
Over the summer, the World Bank forecast 2.6 percent growth in 2019 and 2.7 percent growth in 2020. The International Monetary Fund (IMF) was more optimistic, forecasting 3.2 percent growth in 2019 and 3.5 percent in 2020.
Stock markets have continued to rise to historic levels so far this year despite warnings of slower growth ahead. As the New Year approaches, we wish all of our readers an amazing holiday season!