As Growth Slows, The Economy Is Falling Short Of Trump's Target
President Trump is counting on a strong economy to help him win reelection next year. But new numbers due from the Commerce Department on Wednesday are expected to show the economy lost steam during the summer and early fall.
Forecasters expect the GDP report will show the economy grew at an annual pace of less than 2% during the third quarter — even slower than the lackluster second quarter. At this point, it would take an economic miracle to achieve the 3.2% growth rate for the full year predicted in the president's budget.
"Oh, we won't get a 3-plus% growth rate for the year," said Diane Swonk, chief economist at Grant Thornton. "That's not going to happen."
Third-quarter growth was hobbled in part by temporary factors, including the strike at General Motors which idled tens of thousands of workers during the last two weeks of September (the strike ended last week), and the continued grounding of Boeing's 737 MAX jets.
But the slowdown also reflects a steady decline in business investment. The GOP's 2017 tax cut was supposed to promote a surge in business spending, and the White House promised that would supercharge economic growth. But many businesses have grown skittish in the face of weak demand overseas and the president's trade war.
"Businesses don't know where to place their bets and don't know where to invest when they don't know where the next tariffs are going to come from," Swonk said. "That's been one of the biggest weights on the U.S. economy."
Trump and his allies have tried to pin blame for the slowdown on the Federal Reserve, which raised interest rates four times last year.
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