The U.S gross domestic product has beaten analysts forecast for Q3 of 2019. Compared to the figure for the second quarter, however, the decline in business investments due to macroeconomic uncertainty has brought the figure slightly down.
U.S Economic Activity Printed A Growth Rate Of 1.9%
The Commerce Department has announced at 12:30 GMT on Wednesday, that the economic activity in the United States of America has printed a growth rate of 1.9% (annualized) in the third quarter. According to a recent survey by Dow Jones, Economists had predicted a growth rate of 1.6%. In the second quarter, the U.S economy was reported to have expanded at a 2% rate, which is only marginally higher than the figure for Q3.
The government report has further added that the positive outlook is largely associated with continued government expenditures and consumer spending. While government spending has noted a 2% growth rate (annualized), consumer expenditures have posted a remarkable 2.9% growth rate (annualized).
Imports for the U.S have been highlighted as having increased in the third quarter, that further weighs on an imbalance of $54.9 billion in the U.S trade deficit, as announced in the latest report released in August.
Gross Private Domestic Investments Continued To Decline In The Third Quarter
The decline in the gross private domestic investments has continued in the third quarter with the growth rate hanging low at -1.5%. The contraction, however, is significantly better than that of the second quarter when it was reported at -6.3%, as per the financial analysts.
The ongoing U.S – China trade negotiations have stirred up the uncertainty in the market and has fueled the risk of manufacturing slowdown that has manifested in the form of lower private business investments in the U.S.
Following the U.S advance GDP report for the third quarter, the Chief Economist, Michael Shapiro of the National Association of Manufacturers, remarked:
“For manufacturers, the biggest challenges remain finding skilled labor and trade uncertainties, which make it difficult to hire and expand business operations”
Analysts have further commented that consumer spending makes up over 65% of economic activity in the U.S. While the 2.9% growth rate is sufficiently resilient, it has significantly dropped from previously reported 4.6% growth rate in the second quarter. The global economic slowdown and dawdling manufacturing have kept the retail sales under pressure for September. It was also hinted that the decline in personal consumption expenditures may point at the American households beginning to restrict the spending habits.
According to the Commerce Department, the figure for GDP may strongly affect the FOMC statement and policymakers’ decision regarding another rate cut for the year, which is set for later today (18:00 GMT). The forex market seems to be reserving its response until after the FOMC statement as well, with the relevant currency pairs posting minimal movement following the GDP report so far.