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QINGDAO TODAY
在线翻译:
szdaily -> World Economy -> 
US economy slows, weak investment a red flag
    2019-07-29  08:53    Shenzhen Daily

U.S. economic growth slowed less than expected in the second quarter of the year as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build, which could further allay concerns about the economy’s health.

But the fairly upbeat report from the U.S. Commerce Department on Friday had some red flags for the 10-year-old economic expansion, the longest on record. Business investment contracted for the first time in more than three years and housing declined for a sixth straight quarter.

Federal Reserve Chairman Jerome Powell early this month flagged the two sectors as areas of weakness in the economy. They are likely to provide additional cover for the Fed to cut interest rates Wednesday for the first time in a decade because of rising risks to the economy’s outlook from a trade war between China and the United States, and slowing global growth.

“The key to future economic growth is business spending. Evidently, businesses do not share the ebullience consumers have,” said Sung Won Sohn, an economics professor at Loyola Marymount University in Los Angeles. “This is not a good sign for the economy because there would be fewer jobs for consumers. For this reason, the Fed will cut rates this week.”

The Fed is widely expected to cut its benchmark rate by a quarter point at its meeting this week.

Gross domestic product increased at a 2.1 percent annualized rate in the second quarter, stepping down from an unrevised 3.1 percent pace in the January-March period. Economists polled previously had forecast GDP increasing at a 1.8 percent rate in the second quarter. They estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7 percent and 2 percent.

U.S. President Donald Trump, whose administration has sought to boost the economy through a cocktail of massive tax cuts, government spending and deregulation, downplayed the slowdown in growth and blamed the Fed for the loss of momentum.

“Not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck,” Trump wrote on Twitter. “Almost no inflation. USA is set to Zoom!”

Revisions to growth data published by the government Friday also confirmed the economy missed the White House’s 3 percent target in 2008, growing at a rate of 2.9 percent. When measured on a year-on-year basis the economy only expanded 2.5 percent, instead of 3 percent as previously estimated.

Trump, who likes to brag about the economy being one of the biggest successes of his first term, had highlighted the year-on-year growth figure as evidence of the effectiveness of his policies.

(SD-Agencies)

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