U.S. economic expansion begins to slow

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The U.S. economy grew at an annualized rate of 1.9% in the third quarter of 2019 despite contracting non-residential investment levels, according to a Builders and Associate Contractors (ABC) US Bureau of Economic Analysis data analysis. Non-residential fixed investment declined at an annual rate of 3% in the third quarter after declining at a rate of 1% in the second quarter. The annual rate of fixed non-residential investment in structures, a component closely related to construction, fell 15.3% in the third quarter. Investment in structures has now contracted in four of the previous five quarters, including an 11.1% drop in the second quarter of 2019.

“Today’s report reinforced a number of observations regarding the US economy and the country’s non-residential construction sector,” said Anirban Basu, chief economist of ABC. “First, the economy is slowing down. While consumer spending and government spending remain high, gross private domestic investment continues to decline, this time by 1.5% on an annualized basis in the third quarter. While this is lower than the 6.3% drop seen in the second quarter, the key to remember is that the current economic expansion is narrowing, increasingly fueled by consumers and government agencies that are growing. are in more debt. “

“Second, some segments of non-residential construction continue to soften,” Basu said. “Recent data concerning non-residential construction spending indicate lower spending in categories such as office and accommodation. This was reflected in today’s GDP report, which indicated that spending on structures contracted significantly in the third quarter. For the most part, growth in non-residential construction spending continues to be driven by public construction, including in categories such as water supply and public safety.

“The main question now is whether the slowdown in economic activity will persist into 2020,” Basu said. “Many factors suggest that this will be the case, including a weakening global economy, a US manufacturing sector that is arguably already in recession, vulnerability due to the massive build-up of public, corporate and household debt and uncertain results linked to ongoing trade negotiations. On the flip side, US equity markets continued to soar against the backdrop of better-than-expected corporate earnings and continued Federal Reserve accommodations. Put it all together and the outlook for the US economy has rarely been more uncertain, especially given next year’s election.

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