There are some signs that the record run could be nearing its end. Some forecasting models, particularly those based on the market for government bonds, have been flashing warning signs, and surveys show that economists think the risk of a recession in 2020 has been gradually rising.
“Obviously, the headwinds are increasing,” said Joe Brusuelas, chief economist for RSM, a financial consulting firm. Europe is close to a recession or perhaps already in one. A trade deal with China looks to be months away at best. A flare-up in the trade war could be enough to cause a recession, he said.
On the other hand, this week’s budget deal between the Trump administration and Congress eased the risk of another government shutdown or a standoff over the debt ceiling. And if the United States and China were to reach a deal this fall, that could give the expansion a new life, Mr. Brusuelas said.
“Once that uncertainty is off the table, you’ll see a release of demand,” he said.
The view from Washington.
Friday’s report is one of the last major pieces of economic data before next week’s Federal Reserve Board meeting, when policymakers are widely expected to cut interest rates in an effort to stimulate the economy.
The report is unlikely change the Fed’s mind. But it could affect how policymakers think about the need for further cuts later this year — something investors have been anticipating but that Fed officials have yet to commit to.
The strong details in Friday’s report might weaken the case for further cuts. The Fed has been paying particular attention to inflation, which had been running below its 2 percent target. But inflation picked up in the second quarter: Consumer prices rose at a 2.3 percent rate, or 1.8 percent excluding the volatile food and energy components, according to Friday’s G.D.P. report.
Article source: https://www.nytimes.com/2019/07/26/business/economy/us-gdp-growth.html?emc=rss&partner=rss
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