Economic growth in the final quarter of the year is expected to be on par with third quarter's 2.1%, but it is also likely to herald the start of a slower trend that could continue through the first half of this year.
Economists expect growth in the fourth quarter to be about the same as the third quarter, at 2.1%, but growth could fall off going into the new year.Numbers should reflect less growth in spending in the fourth quarter, stubbornly soft business spending, and a surprise widening in the trade gap in December.Economic growth in the final quarter of the year is expected to be on par with the third quarter's 2.
On Wednesday, the Commerce Department reported that the U.S. goods trade deficit rose sharply in December as imports rebounded and businesses were more wary about accumulating inventory. The goods trade gap, which has fallen for three straight months due to declining imports, surged 8.5% to $68.3 billion last month.
Rupkey said the surprise jump in the trade gap now has made it a toss up for whether growth will be above or below 2%. Jonathan Millar, U.S. economist at Barclays, expects 2% growth, and he says one of the issues forecasters are facing is the impact of volatile oil prices, which rose through most of the fourth quarter.
Millar said he expects to see a downturn in first quarter growth to a pace of 1.5%, based on Boeing's production cuts following troubles with the Boeing 737 Max. Boeing and the ripple effect to other businesses will knock an estimated half percentage point off of growth in the first quarter. It's also unclear what if any impact the coronavirus might have on global growth in the first quarter.
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