Economic Growth in US Cracking Under Strain of Global Slowdown
Jin Lee/Bloomberg News
The United States may not be immune from the global slowdown after all.
Figures on retail sales and manufacturing Jan. 15 showed the world’s largest economy ended the year on a weak note, and the start of 2016 wasn’t better. The one saving grace was a pickup in consumer confidence, but that was mainly because households believed inflation will be low, making subdued wage gains look good by comparison.
“The data this morning has been pretty much one way,” said Gennadiy Goldberg, a U.S strategist at TD Securities USA in New York. “It’s fanning some of these fears that the economy is being dragged down into the mud by the rest of the world.”
Weakness in retail sales compounds concerns that momentum in consumer spending, which has been the backstop of U.S. growth prospects, is starting to fade. Meanwhile, a slowdown in China and other emerging markets has sent commodity prices lower and roiled stock markets around the world, exacerbating the plight of manufacturers who are being hit by an appreciating dollar.
The turbulence complicates the task of Federal Reserve policymakers, who started raising interest rates last month on the expectation that U.S. growth would continue to strengthen and inflation will pick up.
Stocks extended declines Jan. 15 after the reports, with the Standard & Poor’s 500 Index falling 2.9% to 1,866.89 at 12:52 p.m. in New York, as all 10 industries retreated. The Dow Jones Industrial Average slid 473 points to 15,906.
Six of 13 major categories in the retail sales report showed declines in December from the prior month. More importantly, the figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, unexpectedly dropped 0.3%, the most since February.
The slowdown, including electronics stores, clothing merchants and grocers, indicates Americans probably preferred to sock away the savings from cheaper fuel instead of splurging during the holiday season. While hiring has been robust in recent months, faster wage gains remain elusive, one reason household purchases may take time to accelerate.
1 2 3 Next >>
|By Victoria Stilwell and Sho Chandra|
© 2016, Transport Topics, American Trucking Associations Inc.
Reproduction, redistribution, display or rebroadcast by any means without written permission is prohibited.