U.S economy grows at a moderate rate of 2.1% annualized in the fourth quarter

U.S economy grows at a moderate rate of 2.1% annualized in the fourth quarter

  • U.S economy grows at a moderate rate of 2.1% annualized in the fourth quarter.
  • U.S economy expanded at the rate of 2.3% annually (unrevised) in 2019.
  • Trump administration had a target of a 3% growth in the U.S economy in 2019.

The U.S Bureau of Economic Analysis revealed the economy to have grown at a moderate rate in Q4 on Thursday. The data suggested a tough road ahead for the U.S economy with Coronavirus continuing to disrupt business operations and spread rapidly across borders. All in all, the U.S economy has not welcomed the new year on a strongly positive note.

The Commerce Department highlighted a 2.1% growth (annualized) in the U.S gross domestic product (GDP) in the recent quarter that was largely attributed to smaller import bill. In fiscal 2019, the data reported a 2.3% growth (unrevised) in the U.S economy that was branded the slowest in the past 3 years. Trump administration had previously set a 3% annual growth target to be achieved for the second consecutive year.

Coronavirus Could Hurt The Longest Economic Expansion In The History Of The U.S

The U.S economic expansion is currently in the 11th year, marked the longest in history. The rising complications of the health emergency in China that is now threatening to turn into a pandemic, however, are now starting to fuel the debate on the ability of the U.S to sustain its economic expansion in the upcoming months.

As of now, substantial evidence has not been collected that accentuates beyond doubt that the Coronavirus crisis is likely to sabotage the U.S economic expansion. Nonetheless, in an event that the situation worsens, analysts expect the virus to push the U.S Federal Reserve to consider another rate cut to support the economy this year.

According to the experts, the continued disruptions of business operations in China is likely to weigh on the U.S manufacturing sector while the lack of travel and tourism to going to manifest as a hit to the U.S services sector.

U.S Economy Currently Relies Heavily On The Labor Market

The U.S economy currently relies heavily on the labor market. But the Coronavirus crisis can keep the corporate profits under pressure in the upcoming months that could translate into excessive job cuts and reduced hiring. The downbeat stock market, on the other hand, can consequently lead to further pressure on consumer confidence that could see a sharp decline in consumer spending.

While the U.S quarterly growth in GDP came out in line with the experts’ forecast, consumer spending, business investment, and government spending, was reported to have declined in the recent quarter that offset the optimism of greater investment in inventory accumulation and homebuilding.

Thursday’s economic data weighed significantly on the U.S dollar index. Losing traction in the forex market, the U.S dollar was seen trading as low as 1.1006 against Euro.  

By Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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