The US consumer's appetite and morale saved US economic growth in the second quarter, which remains decent even though it has weakened from the start of the year and the markets predict the worst.
The expansion of the world's largest economy was revised slightly lower in the second quarter, to stand at 2% from April to June according to analysts' expectations, instead of 2.1%, according to a second estimate of the department. of Commerce published Thursday.
This confirms the sharp slowdown in growth compared to the pace of the first quarter (3.1%), which however remains relatively strong, largely driven by the vitality of the American consumer.
"WELL economy door", tweeted Donald Trump, adding a blow to the Central Bank that he accuses of slowing down the machine. "If the Fed did the right thing we would be a rocket," he added.
The rise in consumer spending, the traditional engine of the US economy, was revised up to 4.7%, its best score in almost five years.
Consumers have acquired more durable goods, ranging from cars to household appliances. These purchases climbed 8.8%, something that has not been seen for more than fifteen years.
This helped to offset the bad news on the side of business investment (-0.6%) and especially the trade that is obviously suffering from the confrontation with China. US exports fell more sharply than previously estimated at -5.8%, costing GDP 0.7 percentage points.
This is their worst performance since Q3 2018 when the Trump administration began its trade war.
Another dark point, the real estate market collapsed (-2.9%). However, this decline may fade in the coming months, after the central bank (Fed) lowered interest rates in July, which should favor mortgage credit.
Also contributing to growth, government spending jumped 4.5%, which, although revised slightly lower than the first estimate, remains the strongest increase in a decade. This increase is mainly due to a catch-up of expenses related to the "shutdown", the partial closure of administrative services that took place at the end of last year.
Signs of concern
While repeating that the economy is "in great shape" behind the scenes, President Donald Trump recently expressed concern about this weaker growth as he embarks on a campaign for his reelection in 2020 and he had promised strong growth rates of 3% or even 4%.
The central bank (Fed), with its reluctance to lower interest rates significantly in times of growth, has been its favorite scapegoat, treated as "incompetent" or "crazy". But the president has also considered aloud new tax cuts to boost consumption further before retracting for the moment, given the abyssal budget deficit.
The administration's concerns about the pace of expansion are also fueled by market concerns that are showing signs of a future recession.
Shaken by the escalation of the trade war with Beijing, the stock market and the bond market are very volatile.
Several times over the past two weeks, the interest rate curve on government bonds has reversed, pushing the ten-year rates illogically below those of two-year bills. This rare phenomenon is interpreted as the harbinger of a recession in 12 to 18 months, investors thinking that the Fed should lower interest rates.
Everything is not rosy for the American economic machine, the manufacturing sector in particular showing signs of weakness.
For the third quarter, however, projections are still solid, according to the Atlanta Fed's barometer, which forecasts growth of 2.3% year-on-year from July to September.
But if the price escalation between Beijing and Washington hardens, it is not sure that the consumer can continue its momentum.
A string of industrialists and distributors sounded the alarm Wednesday urging Donald Trump to postpone the new customs taxes he wants to impose by the end of the year on all Chinese imports.
These surcharges will drive up prices and result in job cuts, they said in open letters to the government.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Growth averaged 2.6% in the first half of the year, but we would be surprised to see the same pace in the second half, given the precarious state of the manufacturing sector and the reluctance of companies to invest in such an uncertain environment. "