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US Economy Grew by 1.9% Annual Rate in Last Quarter

New figures reveal how a sluggish global economy and trade wars have led to a slow rate of growth in the American economy. The figures were released by the Commerce Department at the end of October and cover the third quarter of the year.

The Main Highlights

The annual growth rate of the gross domestic product was 1.9% over these three months. This continues the trend of slowing growth levels, following a strong start to the year that has dropped off considerably from the second quarter onwards.
These preliminary figures cover July, August and September. It should be noted that consumer spending in the US remained steady throughout this period. However, a decline in business investment was noted.

Business investment showed a 3% decline in total. A big part of this disappointing figure came from the spending carried out on factories and offices. This showed a worrying drop of 15.3% since the previous quarter. 
On the consumer side, spending made up the largest portion of the GDP. However, it fell from a 4.6% rate in the second quarter to 2.9% in the quarter being discussed here. Residential investment was up, reaching an impressive 5.1% following several months on a downward trend.

While consumer spending remained strong, it was noted that Americans are spending less on clothing and footwear. This may be due to extra tariffs being added to some items imported from China earlier in the year.
In terms of exports, there was a slight increase on previous numbers. However, export levels rose more sharply, leading to a net loss. The global trend in slowing economies and lower business investment has also led to more companies putting the focus on the debt collection process.
Overall, this is the first time since the last quarter of 2018 that the American economy has seen growth rates of lower than 2%. Despite this, it was still ahead of many predictions, with a 1.6% growth rate expected by many economists.

Looking to the Future 

The country’s manufacturing sector has suffered through reduced demand in a weak global economy, together with a strong US Dollar. Compared to the sluggish economies in places like Germany and Japan, there is no reason to worry yet, though. 
Shortly after this information was made public, the US Federal Reserve announced a third interest rate cut in a year. This is viewed as being an attempt to keep the economy growing and avoid recession. In fact, the US is currently going through its longest-ever period of continuous growth.

However, the central bank isn’t expected to cut rates any further in the near future. Jerome Powell is the chair, and he said that there is a limit to what they can do to stimulate the economy.
It is expected that the economy will continue to slow down at the end of this year and into the early part of 2020. Therefore, there is likely to be a debate over whether interest rates should be cut further.

Some analysts believe that a quarter showing negative growth rates could occur before too long.