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Researchers at UOB Group gave their view on the recently released preliminary figures for Q2 GDP.

Key Quotes

US GDP growth slowed to 2.1% q/q SAAR in 2Q (from 3.1% in 1Q) but beat market expectations) thanks to robust consumer and government spending. The main drags on GDP were likely related to the impact from trade uncertainties which manifested as the slump in business investments and exports, and a marked private inventories drawdown. There was also a continued residential investment weakness for the fifth straight quarter”.

“Despite the slower beat in 2Q GDP, we revised our 2019 full-year growth higher to 2.5% (from 2.3% previously) as we had underestimated the resilience of the US consumer even though the flagged trade-related risks have been partly manifested in 2Q. We continue to see the prospect of further US GDP growth slowdown into 2020, potentially hitting a technical recession that year although full-year growth is expected to remain positive at 1.3% in 2020. It is important to note that the technical recession projected in 2020 will likely be mild and comes off the heels of a record long business up cycle”.