US Economic Update – July 2019

US economic growth slowed in Q2 2019 – will this trend continue? One implication is that the Fed will cut rates.

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GDP growth slowed in Q2 to a still solid 2.1% q/q (annualised) rate. Growth was supported by strong consumption but business investment declined, and last quarter’s boost to growth from inventories and net exports was reversed. We still expect growth to ease further in H2 2019 before stabilising in 2020. The Q2 GDP result is unlikely to change the Fed’s thinking – a July meeting rate cut remains highly likely, and we expect another cut in September before the Fed goes on hold.

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