By Isaac Cohen*
According to the Department of Commerce, during the quarter ending in September, the US economy grew at a vigorous pace of 3.5 percent, less than 4.2 percent in the quarter ending last June. However, this was enough to reach a yearly average of 3 percent, not seen during the present nine year economic expansion. The economy still is benefitting from the tax cuts and increased government spending, approved in 2017.
Even so, markets and consumers do not seem persuaded that the expansion can continue at the same robust pace. Consumers were the main contributors to last quarter’s rate of growth, while business investment disappointed. However, both appeared less confident, as revealed by a contraction in home building and a slowdown in car purchases.
Additionally in the stock market, another indicator of investor confidence, all three major indexes in October were close to a contraction of 10 percent or more. The stocks of major technology and electronic commerce companies, such as Facebook, Amazon, Netflix and Google’s Alphabet (group known as FANG) lost value in October. Higher interest rates and the trade confrontation with China are some of the factors which are contributing to the decrease in investor confidence.
It remains to be seen how these mixed signals of robust growth, together with the unease among investors, will influence next week’s mid-term elections.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
