The United States’ economic situation has been a bumpy and precarious road for the past several months. But it’s about to get even bumpier. This week’s reports will likely show that the U.S. economy is deteriorating.
The effects of the economically devastating trade war are about to show up, according to a report from Market Watch. A barrage of reports on the economy this coming week are all expected to show that U.S. growth slowed at the end of the summer. The smoldering trade war with China has sapped business investment, undercut American manufacturers and farmers, and caused a decline in hiring. This means the jobs report is likely to be a wake-up call.
The first major report is due Wednesday, and Market Watch states we should buckle up now. Gross domestic product in the third quarter running from July to September is forecast to fall to about 1.4% from a 2% pace of growth in the spring. GDP is the official scorecard, so to speak, of how well the economy is doing. Historically, the U.S. has grown more than 3% a year, but the last time it reached that mark was in 2005. Most economists think the U.S. can grow no faster than about 2%, at least not for an extended amount of time.
The other piece of bad news is due Friday. That is when the government will reveal how many new jobs were created in October. Economists predict that the U.S. generated fewer than 100,000 new jobs last month, a figure that would be the lowest since May and one of the weakest numbers in seven years.
And it could be a lot worse for those consumers out there. Take GDP for example. Consumer spending soared to unsustainable levels in the spring and fell back as expected to a more measured but still healthy pace in the summer. But it’s still high when wage growth is taken into consideration, meaning consumers are likely putting their purchases on credit and not paying for them upfront.
It’s not just the trade war that’s hurt employment growth. Hiring in construction has also waned while the struggling brick-and-mortar retail industry has shed 78,000 jobs so far in 2019 in what’s shaping up to be one of its toughest years ever. –Market Watch
Slower job creation won’t necessarily usher in a recession, however, it can be indicative that businesses are cutting costs by hiring fewer and even laying some workers off. As we know, that can lead to a snowball effect and eventually a recession.