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USA (Index (Trade Deficit ((Overall exports rose at a 9.1 percent rate in…
USA
Index
Trade Deficit
There are signs some of the momentum was lost early in the third quarter. The government reported on Tuesday that the goods trade deficit jumped 6.3 percent to $72.2 billion in July as a 6.7 percent plunge in food shipments weighed on exports.
The Trump administration’s “America First” policies, which have led to an escalation of a trade war between the United States and China as well as tit-for-tat tariffs with the European Union, Canada and Mexico, pose a risk to the economy.
The US president has vowed to target an additional $200 billion of Chinese goods, which would include a tax on electronic parts and consumer goods.
The Trump administration has already imposed 25 percent of tariffs on $50 billion worth of Chinese goods.
In retaliation Beijing has pledged to hit back with tariffs on $60 billion of Us exports, including meat, coffee, furniture and car parts.
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Imports fell at a 0.4 percent rate, with petroleum accounting for much of the decline. The decrease in imports was the biggest since the fourth quarter of 2015. Imports were previously reported to have grown at a 0.5 percent pace in the second quarter.
The drop in imports sharply narrowed the trade deficit. Trade added 1.17 percentage points to GDP growth in the second quarter rather than the previously reported 1.06 percentage points.
GDP
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The US economy advanced an annualized 4.2 percent on quarter in the second quarter of 2018, slightly higher than a preliminary reading of 4.1 percent and beating market forecasts of 4 percent, the second estimate showed. It is the highest growth rate since the third quarter of 2014, as nonresidential fixed investment rose more than anticipated, mainly boosted by software and information processing equipment and imports fell, mainly due to petroleum.
Inflation
Annual inflation rate in the US fell to 2.7 percent in August of 2018 from 2.9 percent in July and below market expectations of 2.8 percent. It is the lowest reading in four months amid a slowdown in cost of fuel, gasoline and shelter.
core inflation
Excluding food and energy, core inflation slowed to 2.2 percent from 2.4 percent.
Employment
The US unemployment rate was unchanged at 3.9 percent in August 2018, above market expectations of 3.8 percent.
Housing Market
While consumer spending has remained strong early in the third quarter, the housing market has weakened further with homebuilding rising less than expected in July and sales of new and previously owned homes falling amid a dearth of properties.
Interest Rate
The robust growth pace likely keeps the Federal Reserve on course to raise interest rates in September for the third time this year.
Markets
Stocks on Wall Street were trading higher, with the S&P 500 .SPX hitting a record high
Dollar
The dollar .DXY was little changed against a basket of currencies while prices of U.S. Treasuries mostly fell.
Consumer Spending
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, was lowered to a 3.8 percent rate in the second quarter instead of the previously reported 4.0 percent pace. Consumer spending increased at a 0.5 percent pace in the first quarter.
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