US Economy in Focus: The Latest News and Trends in 2019
For many, economic news has been the focus of 2019 and there is no doubt that the US economy is likely to remain in the spotlight for the foreseeable future. With a fast growing population and continued global economic uncertainty, the US economy is playing a major role in the global business landscape. In this article, we take a look at the latest news and trends in the US economy in 2019 and what they may mean for American businesses and consumers.
Economic Growth
The US economy is currently enjoying a period of sustained growth, driven by low unemployment and consumer spending. The US gross domestic product (GDP) is currently running at an annual rate of 2.6%, and unemployment remains around 4%. This is the longest economic expansion in US history and is expected to continue into 2020, fueled by consumer confidence and consumer spending.
The strength of the US economy has been reflected in corporate earnings, which have grown 7.2% compared to last year. The stock market has been a major beneficiary of this growth, with major indices like the Dow Jones Industrial Average reaching all-time highs.
Consumer Spending
Consumer spending is one of the key drivers of the US economy, and recent figures suggest that American consumers are still feeling the flush of confidence afforded by healthy employment figures. According to the U.S. Bureau of Economic Analysis, consumer spending accounts for over two-thirds of the US economy.
Advancements in technology have further fueled consumer spending, with a growing number of Americans embracing digital payments, online shopping, and mobile commerce. Some of the biggest online retailers, including Amazon, continue to enjoy record growth, and Amazon recently announced plans to expand its physical presence in the US, with over 3,000 brick-and-mortar stores.
Interest Rates and the US Dollar
The Federal Reserve controls the supply of money in the US by setting interest rates. Since December 2015, interest rates have hovered around the 1.5 – 1.75% mark, but there is speculation that these could increase to 2 – 2.25% at the end of this year. A rise in interest rates could bolster the American dollar and make American exports more competitive.
The weakening of the US dollar began in March 2018 and has continued into 2019. The main cause of this weakening is the ever-strengthening Euro, which recently reached a two-year high against the American currency. This could see a further reduction in the value of the US dollar in the coming months.
Unemployment Rate
Despite the current low levels of unemployment, there have been reports of job losses in certain sectors, driven by slower global economic growth and the impact of the trade war between the US and China. These include job losses in the manufacturing and construction sectors, where more than 130,000 jobs were lost in the last quarter of 2018.
However, the US job market remains healthy for the majority of sectors, with unemployment rates at their lowest levels since 1969. Industries such as leisure and hospitality, healthcare, and education continue to create jobs, with leisure and hospitality accounting for 1.2m new jobs since October 2014.
Inflation
Inflation reached its highest level since 2008 in October 2018, reaching 2.5%. This was driven by rising fuel costs, as well as increased tariffs imposed by the US and China. Since then, inflation has remained stable at 2.2% and is expected to stay around this level in the coming months.
MoM Growth
The US economy has enjoyed monthly growth since August 2017, with the economy expanding by 2.1 – 2.5 % in month-on-month terms during the first quarter of 2019. This was driven by a surge in consumer spending, with consumer spending accounting for 70% of the total US economy.
Foreign Investment
Foreign investment plays an important role in the US economy, and 2019 has seen an increase in investment from countries such as China, India, and Canada. This has been driven both by strong consumer spending and by the lowering of corporate tax rates. This influx of foreign capital should remain a major driver of US economic growth throughout 2019 and beyond.
The US economy is currently enjoying a period of sustained growth and consumer confidence remains high. US economic trends will continue to be watched closely in 2019, as the US economy is likely to remain a key factor in dictating the course of global economics. While there may be some sector-specific sluggishness due to trade tensions, the US economy as a whole should remain healthy throughout the year.
