USA-stabilitet dækker over negative signaler

The details show slower consumer spending growth and weak business investment being offset by another strong residential investment figure, robust government spending and a plunge in imports resulting in a major contribution from net exports to the headline growth rate.

In fact, net trade contributed 1.5% of headline growth as the “will-they-won’t-they” debate over tariff hikes during the second half of the year led companies to slash imports at an 8.7% annualized rate in 4Q – remember the long lead times in shipping form overseas. This in turn contributed to a big reduction in inventories, which subtracted 1.1% from headline GDP growth. These components are likely to reverse course in the current quarter and on balance become a headwind for GDP growth in 1Q20.

The concern surrounding business investment continues with non-residential fixed investment declining for the third consecutive quarter. Meanwhile, the slowdown in consumer spending growth was more marked than expected given the strength of sentiment, the strong jobs market and record stock prices.

Looking ahead, it is far too early to say whether the coronavirus outbreak will have a dampening effect on US economic activity, but in an environment of already subdued global growth it certainly increases the downside risks. The US yield curve, which is flirting with inversion once again, highlights broader market fears that the virus and its human and economic threat could spread. The more that it does the more likely it starts to alter consumer and corporate behavior, thereby prompting policy action to mitigate the dangers.