Remember when the U.S. was going to plunge the world into a great recession? That’s what Nobel laureates who can use The New York Times as their bullhorn had to say nearly three years ago.
That’d be Paul Krugman. And he’s still wrong.
The U.S. growth rate in the third quarter will be better than every G-7 nation, better than Brazil and better than South Africa. He should have said a Merkel victory in 2017 would have ruined Germany’s economy. At least there we could have argued that he had a point.
U.S. quarterly growth rate in the third is seen rising by 0.4% versus second-quarter growth of 0.5%. By comparison, Germany is facing back to back economic contraction.
Italy isn’t growing at all; the U.K. went from contraction to 0.10% despite Brexit blowing a hole in the economy. France is growing at 0.3% and holding its own.
In emerging markets, Brazil’s quarterly GDP growth rate will go from 0.44% in the second quarter to 0.3% in the third while South Africa goes from 0.77% to 0.3% quarterly growth, says the Economist Intelligence Unit (EIU).
On an annualized basis, the U.S. is the emerging market of the advanced economies. Only Canada comes close.
It’s slowing from its previous infusion of fiscal stimulus, but remains at a solid 1.9% annualized thanks to consumer spending, according to Commerce Department data released on Wednesday.
GDP growth avoided the steeper drop-off feared by economists, like Krugman, but the U.S.-China trade war is having an effect on corporate investment.
As he seeks to pause the tariff portion of the China trade war, the economic growth in the U.S. gave Trump a measure of breathing room in his first two years.
This year, Trump’s GDP growth will look a lot like Obama’s.
The U.S. economy is showing signs of some burnout, but consumer spending remains firm. Ongoing job and wage growth bode well for continued economic growth, even if it is softer than Trump would like.
See: The Trump Economy Vs The Obama Economy – The Washington Post
The U.S. is going on a record 11th year of economic expansion.
General uncertainty about the direction of trade policy led to corporate investment contraction in the second quarter and will do so again in the third, EIU analysts believe. As a result, they expect the U.S. to slow a bit more in the fourth quarter and post an annual GDP growth rate of 2.2%, falling to 1.6% in 2020.
Meanwhile, the Chinese economy slowed to 1.35% in the second quarter and is expected to grow slightly less in the third.
Beijing will likely increase stimulus spending and use other fiscal levers to keep the economy going as China goes through pains caused by its own homemade structural reforms and the external forces of Trump’s trade war.