US economy FAILS to beat forecast: Trade war pushes GDP lower than estimated

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Gross domestic product (GDP) increased at a 3.1 percent annual rate, the government said in its second reading of first-quarter data.

This was slightly down from the 3.2 percent pace forecast by the Bureau of Economic Analysis last month.

However, the figure did beat an estimate from Dow Jones, who thought the economy would grow 3.0 percent.

For the end of last year, GDP grew by 2.2 percent in the October to December period.

Excluding trade, inventories and government spending, the economy grew by 1.3 percent as reported last month.

That was the slowest since the second quarter of 2013.

The US economy has been dented in recent months from escalating tensions between Washington and Beijing, with the two powerhouses locked in a bitter trade spat.

US President Donald Trump recently hiked tariffs on $200billion worth of Chinese imports from 10 percent to 25 percent.

The American leader has also threatened to slap 25 percent tariffs on an additional $300billion worth of Chinese goods.

China has retaliated to US aggression by raising duties on a revised list of $60billion worth of US products to as high as 25 percent.

The latest economic update suggests the trade war has damaged growth in the US.

Industrial production and orders for long-lasting manufactured goods declined in April as businesses placed fewer orders at factories.

Retail sales were also weak last month and the housing market continues to struggle.

This is largely believed to have been impacted by President Trump’s hefty tax cuts and spending increases last year.

The Atlanta Federal Reserve is forecasting GDP to rise by a 1.3 percent pace in the second quarter.

Export growth in the first quarter was revised up to 4.8 percent, outpacing an upgrade to imports. 

Growth in inventories was revised down to a $125.5billion rate in the first quarter from the previously estimated $128.4billion pace.

Business spending on equipment dropped by 1.0 percent, its weakest level since the first quarter of 2016.

Government investment increased at a 2.5 percent rate.

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