U.S. goods trade deficit deteriorates in December

[TaiShang]

28-Feb-2019

U.S. goods trade deficit deteriorates in December

CGTN

The U.S. goods trade deficit widened sharply in December as slowing global demand and a strong dollar weighed on exports, another sign that economic growth slowed in the fourth quarter.

Other data from the Commerce Department on Wednesday showed new orders for U.S.-made goods barely rose in December and business spending on equipment was much weaker than previously thought, pointing to a softening in manufacturing activity.

The reports, which added to weak December data on retail sales and housing starts, could prompt economists to cut fourth-quarter GDP estimates. But some of the drag on growth from the goods trade gap and weak business spending on equipment could be offset by a strong increase in inventories in December.

The goods trade deficit jumped 12.8 percent to 79.5 billion U.S. dollars in December, boosted also by an increase in imports. Exports fell 2.8 percent amid steep declines in shipments of foods, industrial supplies, and capital goods. Imports increased 2.4 percent driven by food and capital and consumer goods.

Retail inventories increased 0.9 percent in December after falling 0.4 percent in the prior month. Retail inventories, excluding motor vehicles and parts, the component that goes into the calculation of gross domestic product, rebounded 1.0 percent in December after dropping 0.9 percent in November.

A General Electric (GE) factory in Lafayette, Indiana, U.S. / VCG Photo


Growth estimates for the fourth quarter are currently around a 2.0 percent annualized rate. The government will publish the fourth-quarter GDP report on Thursday. The economy grew at a 3.4 percent pace in the third quarter.

In another report on Wednesday, the Commerce Department said factory goods orders edged up 0.1 percent in December amid declining demand for machinery and electrical equipment, appliances and components.

Manufacturing, which accounts for about 12 percent of the economy, is slowing as some of the boost to capital spending from last year's 1.5 trillion U.S. dollars tax cut package fades. In addition, the strong dollar and cooling growth in Europe and China are hurting exports. Lower oil prices are also slowing purchases of equipment for oil and gas well drilling.

In December, orders for machinery dropped 1.0 percent after tumbling 2.0 percent in November. Orders for mining, oil field and gas field machinery plunged 5.2 percent after rising 1.9 percent in November. There were also decreases in orders for industrial machinery as well as turbines, generators and other power transmission equipment in December.

https://news.cgtn.com/news/3d3d414d796b544f32457a6333566d54/index.html

 

[TaiShang]

22-Feb-2019

Leading economists predict gloomy 2019 US economy
CGTN

The U.S. economic expansion is shifting into the late-cycle stage as fiscal and monetary policy stimulus are dissipating while the impact of protracted trade tensions is biting back, said the latest report by the BlackRock Investment Institute.

Business cycles are identified as having four distinct phases: expansion, peak, contraction, and trough.

"We assess that it (the U.S. economy) will enter the late-cycle phase at some time in the first half of this year," as labor market slack and the output gap suggest greater overheating, Elga Bartsch, chief economist at BlackRock Investment Institute, said Thursday while giving a briefing on the report themed "The global economy and 2019 outlook."

She said that the projection was based on analyzing a wide range of U.S. economic variables including a slowdown in growth, a gradual increase in wage inflation, the unemployment rate being below the natural rate, credit ratio and the savings behavior of the private sector.

The U.S. slowdown in 2019 will come in the context of an economy that is converting this year into a late phase of the business cycle, the final phase before a downturn, according to the report co-authored by Bartsch, which was issued in late January.

"This tempers our assessment of the remaining room to run in this expansion, even though we think that recession risks in 2019 are limited," researchers said in the report.

The report forecasted a global slowdown this year, adding that "the U.S. economy becomes a drag rather than a driver."

While a "synchronized slowdown" is to be expected in 2019, analysts noted in the report that the slowdown is likely to be led by the United States but should partly be cushioned by more steady growth in Europe and emerging markets, notably China.

According to Bartsch, late cycle phases of the expansion lasted roughly six quarters historically.

It is important to note that the tipping point that pushes an expansion into recession could be triggered by the central bank tightening overly its policies, she added.

The minutes for the U.S. Federal Reserve's January 29-30 meeting released on Wednesday highlighted the higher uncertainty in the economic outlook, especially the rising volatility in the government policy environment.

Facing greater uncertainties ahead, the U.S. central bank indicated it would be patient on future rate hikes.

https://news.cgtn.com/news/3d3d774d3163444f32457a6333566d54/index.html