The summer temps may have been record-setting hot, but the economy experienced some chills. Data out Wednesday via the Commerce Department shows GDP grew at a 1.9% rate from July through September, down from a growth rate of 2% in the second quarter. Why, what it means, and President Trump's morning thoughts on the economy:
- The Washington Post frames the slowdown as expected, as business investment was curtailed following the president's decision to ratchet up the trade war with China at the start of August. Many expected much worse, reports the Hill, with some forecasts as low as a growth rate of 1.3%.
- The Post notes the 3% drop in business investment in the third quarter is the largest since late 2015: "Still, the sustained pace suggests it is unlikely to dive into a recession anytime soon, unless there is a major shock or the trade war worsens significantly."
- Consumer spending makes up 70% of economic activity. It grew at a healthy 2.9% in the third quarter, down from 4.6% the quarter prior.
- The AP points out Trump has set "3%-plus increases ... as a benchmark to demonstrate that his policies are succeeding in lifting the economy above the modest 2.2% growth of the Obama years." Growth for 2019 is expected to end up around 2.3%. NPR notes we'd need "an economic miracle" to end up at the 3.2% growth rate that appears in Trump's 2019 budget.
- Though the GDP report was better than expected, most investors doubt it will do anything to change the mind of the Federal Reserve, which is expected to announce a quarter-point rate cut at 2pm Wednesday, reports CNN. (Update: It did.)
- About an hour prior to the report's release, Trump tweeted, "The Greatest Economy in American History!" The Week contrasts that with a tweet Trump wrote in 2012 during Obama's presidency: "Q1 GDP has just been revised down to 1.9% ... The economy is in deep trouble."
- So is he right about the greatest part? The Post reports that if the annual pace of roughly 2.9% seen thus far is sustained for the remainder of his term, it would be the fastest term of growth since the Clinton years. But that still wouldn't make it the greatest, as Clinton and Reagan both experienced growth in excess of 3% a year during their terms.
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