In the second quarter, GDP has decreased to 2.1%, but thanks to strong consumption, higher than expected - HailNewsUp.com: provides the latest news from India and the world

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Friday, July 26, 2019

In the second quarter, GDP has decreased to 2.1%, but thanks to strong consumption, higher than expected

The Commerce Department said on Friday that growth in the second quarter slowed, but Wall Street did not think as much as the tariff and global recession.

In the first quarter, GDP fell 2.1%, below 3.1% and the first quarter of 2017, the weakest growth was when President Donald Trump took over the office. Dow Jones's second-quarter estimate was for an increase of 2%.

However, the underlying figures in the report showed lowering the apprehension of recession, which has been a major part of the interaction between economists and policymakers in the Federal Reserve.

Michael Aaron, the chief investment strategist of State Street Global Advisors, said, "The conversation about the recession was always exaggerated." "The people who were making chicken a bit, the sky is falling, we are talking to clearly talk about recession at the beginning of that assessment. Economic data indicates that the economy is not near a recession, At least in the next year or more. "

Consumer and government spending helped to promote GDP during the April-June period, while the decline in trade investment declined. Personal consumption expenditure grew by 4.3%, the best performance since the fourth quarter of 2017. Government consumption expenditure and gross investment increased by 5%, the fastest pace since the second quarter of 2009 was coming out of the great recession of the economy.

At the same time, gross domestic investment fell 5.5%, the worst since the fourth quarter of 2015, structural expenditure fell 10.6%. This reduction took the full percentage of the final GDP figures.

Concern about round-trip tariff fight between USUU And China has been a major driver of business spirit, and officials have expressed concern in elections and both of them

It has been reported among the increasing concern that the weakening of the development that affects a large part of the world economy is spreading to America. While consumer activity has been strong, manufacturing growth has slowed down recently and housing remains a weak point.

"The data clearly shows signs of the bifurcated economy. "The invention of weakness in manufacturing has been weighed on components such as invention and fixed investment, but healthy consumers in the United States have helped improve the economy," said Glennide's investment officer Michael Reynolds. Strategy, in a note. "Together, strong national consumers are more than compensating for winds against weak manufacturing economy."

An increase in consumption has to be continued for an economy which has not fulfilled the promise of 3% growth of Trump, which was due to a $ 1.5 billion tax deduction approved in 2017.

In addition to telling the most recent progress, a review of the last five years was presented in Friday's report. New data has shown that in GDP growth of 2.9% has increased in 2018, when compared to the total production during the year, though another measure called genuine GDP, which is compared to the fourth quarter of 2017, 2017 In relation to the same period, only a 2.5% increase, a decrease of 2.8% in 2017.

Joseph Brusula, Chief Economist, RSM said, "We had a large number of personal consumption which would not be sustainable in the future." "There is a brief period of increase of 3% in the rearview mirror. The economy is slowing down, but it will not end in a recession. "

The Federal Reserve policymakers have expressed concern about a possible recession and hopefully, a quarter-point reduction cut in their policy meeting will be approved next week. The Federal Reserve currently points to its reference fund rate between 2.25% and 2.5%, but there is a possibility of cutoff in the markets 100% and before the end of the year, there is a possibility of two more reductions of about 53%. CME

While central banks care about rates, corporate profits have proved to be more flexible than expected, and analysts believe that the economy has been strong enough to support earnings in a slow way. In addition, Goldman Sachs said in a report earlier this week that recent economic data shows improvement, and bank strategists expect that GDP will be recovered by around 2% in the second half.

The markets were still waiting for the Federal Reserve to cut down, however, after the GDP report of around 24% in the morning, the likelihood of 50 basis points reduction was 19%.

"The network is in view of the global causes of the Federal Reserve, and the strength of that market and therefore, consumption is based on expectation of low policy rates, the Federal Reserve does not have another option to reduce it to 25 T. S. Lombard's Chief American economist Steve Blitz said, look at Wednesday and see if the data has been deployed to create the need for a new cut in September.