Strong growth data obscure a probable slowdown to come

FINANCIAL MARKETS may have wobbled in recent weeks—the S&P 500 fell by 7.3% in October. But America’s real economy still seems to be in rude health. Figures released on October 26th showed economic growth of 3.5%, at an annualised rate, in the third quarter of 2018. Most economists had expected a sharper slowdown after the 4.2% expansion recorded in the preceding three months. On just one other occasion since the financial crisis, in 2014, has America clocked up two consecutive quarters of such speedy growth. Can it last?

Some fear not. The economy has been given temporary fizz by President Donald Trump’s tax cuts. Though these will be in place for some time, the impact on growth may not last. Together with February’s budget bill, they will boost annual GDP growth by 0.6-0.8 percentage points by the end of 2018. But the impact will fade to 0.3 percentage points in 2019 at best, estimate Karen Dynan and Jason Furman of the...



via The Economist: Finance and economics Business Feeds

0 nhận xét:

Post a Comment