The American economy grew by 1.9% in the third quarter.
The US economy slowed down less than expected amid several key economic changes. The economy has seen business investment continue to contract, a factor that is being offset by strong consumer spending. The strong American consumer is the primary factor in reducing fears of an impending recession. Interest rates were cut on Wednesday, marking the third Federal Reserve rate cuts of 2019. The Fed’s move comes amid growing global uncertainty, while the US maintains the longest period of economic expansion in history.
Despite low unemployment and a generally strong American consumer, concerns over trade disputes, slowing global economic growth, and Brexit remain significant factors for the future of the US economy. The trade war with China has taken a particularly hard toll on business confidence, and the third quarter saw the second straight quarterly reduction in business investment. This news comes just as 2018’s $1.5 trillion tax cuts are starting to wear off, slowing the momentum of America’s 11-year expansion. The main concern right now is whether the business uncertainty we are now seeing will end up spilling over onto consumers, which would put a significant restraint on economic growth.
In better news, the Fed doesn’t see a serious risk to the US economy right now. Fed Chairman Jerome Powell cited a strong labor market as the factor that will keep the economy growing. “The consumer-facing companies that we talk to in our vast network of contacts report that consumers are doing well and are focused on the good jobs market and rising incomes,” Powell explained.