A first read of US economic growth data for the three months to July will be released today, likely confirming forecasts that economic output held steady at 1.9%.
While the estimate represents a slowdown from the first quarter figure of 3.1%, today’s release is not expected to trigger a recession warning due to ongoing strength in consumer spending. Second quarter consumer spending is forecast to surge above 4%–up from 1% in Q1–giving reason that the US can sidestep recession in the near term.
However, today’s data is also expected to show effects of the ongoing trade war with China, signalling that further economic woes could lay ahead. Estimates show that American’s manufacturing sector has already taken a substantial hit, with investment and business spending also slowing considerably. Economists warn that the spat threatens to spill over into the technology and services sectors too.
Short-term economic anxiety could be soothed by an interest rate cut—something being considered by the Federal Reserve. Such a move would be a first: the Fed has never cut rates at the same time as a bull run on the stock market.
However, a rate cut will not address the underpinning concerns over trade relations with China. While today’s data may paint a positive picture of the economy, concerns will ultimately persist until a trade deal between the US and China is reached.
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