Dallas Fed President: 2% economic growth may be to come in 2020
Dallas Federal Reserve Bank President Robert Kaplan discusses the likelihood for economic growth despite ‘sluggish’ business investment driven by global trade uncertainty.
Bolstered by the consumer, the U.S. economy is on track to see a solid year of growth in 2020, according to Dallas Federal Reserve Bank President Robert Kaplan.
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“[I] believe the most likely case is that we’ll grow in the neighborhood of 2 percent next year,” he told FOX Business,’ Maria Bartiromo.
Kaplan spoke to the improvement of household balance sheets and a tight labor market, but did note some signs of weakness.
“Primarily due to trade uncertainties and weak global trade, global growth is weaker, manufacturing is weaker and business investment, as you’ve been talking about, is weaker,” he said.
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The “good news,” Kaplan said, is that manufacturing and business investment make up a smaller portion of GDP than consumption. He argued that there could be an issue if those weaknesses spread to consumers, but thinks, ultimately the U.S. has a “good chance” to navigate its way through these weaknesses to growth in 2020.
In the third quarter of 2019, domestic investment accounted for just over 17 percent of GDP, while consumption made up just over 68 percent, according to Federal Reserve data.
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The weaknesses of domestic investment can largely be attributed to trade uncertainty, Kaplan suggested.
“Because of trade uncertainty and, to some extent, because of the inability to find workers, in some cases [businesses] put cap-ex spending, by in large, on hold. They haven’t canceled projects, but they put them on hold for this year and a good part of next year,” he said.
Kaplan thinks the better investment is possible but still expects it to remain “sluggish” next year.