U.S. President Donald Trump likes to talk about the economy and how it flourished during his time in office. In 2019, for the second year in a row, annul growth fail to reach 3%. For example, in 2019, the economy grew by 2.3%. As a reminder, the Trump administration’s goal was to reach 3%. On Thursday, the U.S. Commerce Department released its second estimate of the GDP of the last quarter.
Based on this data, in the last quarter of 2019, gross domestic product (GDP) increased at a 2.1% annualized rate, supported by a smaller import bill.
Financial markets experienced problems due to the coronavirus outbreak. More than 2,000 people died as a result of the outbreak, mostly in China. Moreover, the virus spread to other countries. The current situation could create problems for the U.S. economy. The country’s economy continues to grow for more than a decade. However, the virus outbreak could undercut the longest U.S. economic expansion on record.
Commerce Department and U.S. economy
As mentioned above, several factors affected the U.S. economy. Hopefully, in January, U.S. and China signed the Phase 1 trade deal. The protracted trade war between the two largest economies in the world created numerous issues for the economy. The partial trade deal is a step forwards as both sides can work together to end this dispute altogether.
In the last quarter of 2019, investors started to sell risky assets such as stocks and switched to government bonds as they are safer than stocks.
Last year, the U.S. Federal Reserve reduced rates three times. However, the central bank made it clear that plans to keep monetary policy on hold at least through 2020.
As can be seen from the data provided by the Commerce Department, the U.S. economy grew less than 3%.
At the moment, there is no real evidence that the coronavirus outbreak affected the U.S. economy. However, the situation most likely would change due to the struggling manufacturing sector. This sector would decline as Chinese authorities closed many factories to contain the outbreak. As a result, this measure disrupted supply chains.
Despite the fact that the Commerce Department, kept the last quarter’s GDO growth unchanged, consumer spending slowed more than previously reported. Moreover, the business sentiment also declined as well as government spending.
In the last quarter of 2019, excluding trade, inventories, and government spending, the economy grew at a 1.3% rate. Thus, it was the worst result in four years.
The Commerce Department revised the information about business investment. According to the updated information, business investment fell 2.3% rate instead of 1.5%.