US GDP could slow its pace in 2020 – UOB
Senior Economist Alvin Liew at UOB Group assessed the recently published advanced figures for US Q3 GDP.
Key Quotes
“The 2nd estimate of the US 3Q GDP showed growth edging higher to 2.1% q/q SAAR in 3Q (up from the preliminary print of 1.9%) and a tad faster than the 2.0% recorded in 2Q. The improvement in 3Q growth reflected upward revisions to personal consumption expenditure (PCE), gross private domestic investment, and private inventories, offsetting the downward revisions to state and local government spending as well as net exports of goods and services. Residential investment remained a bright spot as it rose 5.1% in 3Q, the first increase since 4Q 2017”.
“The upside surprise in 3Q GDP and a stronger than expected October core durable goods orders, helped alleviate recent concerns about the US GDP growth outlook and we keep our 2019 full-year growth forecast at 2.5%, which implies a 1.8% GDP expansion in 4Q on the back of still healthy US consumption spending helping to mitigate the downside from weaker investments and export outlook”.
“We forecast US GDP growth could slow further into next year as we believe that the flagged trade-related risks which have impaired business spending in 2Q and 3Q, may eventually take its toll on US consumption spending. That said, based on the latest developments, US full-year growth is expected to remain positive, and we are less bearish on growth outlook and accordingly revised it higher to 1.5% in 2020 (from 1.3% previously). We also lowered our risk assessment of a technical recession next year”.