The United States Will Slow Down Its Economic Growth And Fully Reduce Interest Rates.

In the second quarter of the US, the economic growth slowed down obviously, and the investment in enterprises was shrunk during the chaos of trade situation. Fortunately, private consumption made up for the gap. The data will give the Union more reason to cut interest rates, but it remains to be seen whether the economy is weak enough to be supported by multiple interest rate cuts.

According to the US Department of Commerce, after adjusting for inflation and seasonal fluctuations, the gross domestic product (GDP) in the second quarter increased by 2.1%, an annual rate of 3.1%, and did not reach the 3% growth target of US President trump. Nevertheless, this data is still better than the market expected 1.8% to 2%.

The main reason for the slowdown in the second quarter of US economic growth is that the international trade situation is so treacherous that enterprises are full of uncertainty. The US China trade talks hit a reef in May, and the two countries later raised tariff rates on each other's goods. Trump threatened to impose tariffs on Mexico to deal with illegal immigrants on the US Mexico border.

In the second quarter of this year (2019), investment in non residential fixed assets reflecting enterprise spending on software, R & D and equipment fell by 0.6%, the first decline since 2016 and the pattern of 4.4% growth in the first quarter. Consumers are now playing the savior to stabilize the overall economic situation. The consumption expenditure, which accounts for about 7 of the US economy, has increased by 4.3% annually, much higher than the 1.1% in the first quarter and the best growth rate since 2017.

This GDP data is better than market expectations, growth rate is worse than the first quarter, so that the Federal Reserve Board (Fed) has more reason to support the economy by cutting interest rates, which is in line with investor appetite and drives us stocks higher. The standard & Poor's 500 index and Nasdaq composite index rose by 0.74% and 1.11% respectively, to a new high.

However, the latest data from the United States to (2018) economic growth rate from 3% to 2.5%, so that during the campaign has been bombarded former president Obama failed to achieve the 3% growth rate of Hampton's boastful achievements.

In the face of slowing economic growth, trump tweet insisted that the growth rate of 2.1% was "not bad" and once again blamed it for the "fetters" of the US economy. The 4 year hike last year triggered a sharp attack on trump. Even though interest rates remained unchanged this year, trump was still not satisfied, and urged federal officials to raise interest rates by raising interest rates.

In the wake of the cooling up of the global economy, the trade situation is full of variables, and the officials are worried about the weak inflation of the United States, the financial market generally expects that the Federation will announce the first rate cut in more than 10 years and cut the federal funds interest rate target interval by 1 yards (0.25 percentage points). The target area of the federal funds rate is currently between 2.25% and 2.5%.

The Wall Street Journal reported that the latest GDP report showed that the second quarter of the United States had a strong consumption expenditure and weakened investment, and the overall situation of the economy was complicated. The low unemployment rate and the increase of the public income still play a supporting role, but the global economy loses momentum, the rise of the US dollar and trade uncertainty all bring variables to the future. New York Times reported that although the US economic growth slowed down, there were not many signs of stagnation after 10 years of economic expansion.

The report pointed out that the joint meeting will announce interest rate cuts on 31 (7) 31. The latest GDP report may weaken the reason for further easing of monetary policy. The main reason is that the inflation rate of the second quarter has increased significantly: the PCE consumer price index, which is expected to increase by 2.3%, is higher than that of the first quarter. After excluding the volatile food and energy, the core PCE price index climbed 1.8%, higher than the 1.1% in the first quarter.