Many economists saw Trump’s decision to lower trade tensions by signing a Phase One agreement with China as key to lowering the risk of a recession this year.
‘”The economic fundamentals are very solid right now,” said Gus Faucher, chief economist at PNC. “Some of the downside risks that the Federal Reserve had been concerned about have faded now that we have a Phase One trade deal.”
Lawrence Kudlow, head of the president’s National Economic Council, said Thursday he expects GDP growth will be helped in the coming year by the new trade deal with Canada and Mexico, and the commitments by the Chinese to boost purchases of U.S. exports.
“China has to work its way through this health crisis, but I think once that abates, you will see big export” gains, Kudlow told reporters at the White House.
For the October-December quarter, growth was supported by solid but slower consumer spending and an improvement in the trade deficit. Those factors offset a further drop in business investment in new plants and equipment and a slowdown in businesses’ restocking of store shelves.
The full-year 2.3% growth of GDP in 2019 marked a sharp drop from the 2.9% gain in 2018, when the economy enjoyed a boost from Trump’s tax cuts and from billions in increased government spending.
Most economists foresee even slower growth in 2020 of around 1.8%. That assumes no serious damage from the coronavirus or other threats.
Even the U.S. elections for the White House and Congress could end up weakening growth if the campaigns were to further elevate uncertainty among consumers and businesses and thereby lead them to cut back on spending.
Under Trump, GDP growth has so far fallen well short of his campaign pledges. But unemployment has reached a 50-year low during his presidency. And after trade tensions with China began to cool late last year, the stock market rebounded and attained new highs.
Mark Zandi, chief economist at Moody’s Analytics, said the presidential election may turn on how the economy is faring in key swing states.
“What really matters is the economy in Pennsylvania, Michigan and Wisconsin,” Zandi said. ‘”There things are not going well because the trade war has done a lot of damage in those states.”
For the fourth quarter, consumer spending, which accounts for about 70% of economic activity, slowed to an annual gain of 1.8%. That was down from an annual spending surge of 4.6% in the second quarter and 3.2% in the third quarter. The slowdown was led by a drop-off in new car sales.
Business investment spending fell for a third straight quarter, dropping at an annual rate of 1.5%, a decline that has been blamed on business uncertainty generated by the rising trade tensions. The hope is that business will start investing again now that the Trump administration has declared a trade ceasefire with China.
Trade contributed to growth in the fourth quarter with imports, which subtract from U.S. growth, falling much faster than exports. That trend added 1.5 percentage points to growth in the quarter. But economists see this trend as only temporary: Many U.S. businesses had accelerated their pace of imports in the July-September quarter to get ahead of an expected increase in Trump’s import taxes. As a result, they needed fewer imports in the October-December quarter.
Business stockpiling subtracted a full percentage point to growth, with part of that blamed on the General Motors strike that cut into car inventories.
___
AP White House reporter Darlene Superville contributed to this report
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
