The US economy is not fully immune to the ongoing political pressures. In particular, the never-ending trade dispute with China appears to be becoming an increasing burden for industry. Direct effects are less likely to play a role here than the expectation of higher prices (due to customs duties) and thus declining profit margins. The mood in industry has recently fallen significantly. According to surveys conducted by the ISM Institute, the climate has deteriorated significantly in recent months. In September, the indicator fell below the growth threshold of 50 points.
By contrast, the US labor market still appears to be developing robustly, albeit not without flaws. The number of industrial employees has hardly grown since the beginning of the year. The visible slowdown in employment growth compared with the previous year is partly due to the shortage of qualified workers. However, concerns about the robustness of the labor market and about the US economy as a whole are fuelled by the recent slight decline in wages.
The US economy is highly dependent on household spending. The further development of consumer sentiment and incomes is correspondingly important. So far, the good employment situation and the associated positive development of private household incomes have been able to offset the uncertainty caused by the trade conflicts. However, a slowdown in employment and wage growth could quickly upset this balance.
Overall, we expect a slowdown in growth momentum in the USA in the coming quarters. In 2020, the growth of the US economy should thus slide below the 2 percent mark for the first time in three years and probably be only 1.8 percent, and there should be no significant acceleration in growth momentum in 2021 either.