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MNI PREVIEW: US 3Q GDP Seen Slowing to 1.6% From 2% on Capex

By Alexandra Kelley
     WASHINGTON (MNI) - U.S. economic growth is expected to fade again in the
third quarter on weak business investment.
     Gross domestic product expanded at a 1.6% pace according to the Bloomberg
median, slower than 2% in the second quarter and 3.1% in the first three months
of the year. 
     Similarly, the GDP Price Index is expected to decline to 1.9% from 2.4%.
This anticipated figure comes close to the lowest reading in the past six
quarters, which was 1.1% in the fourth quarter of 2018. 
     Some points to watch on Wednesday are: 
     -Business investment is expected to remain soft amid continued trade
tensions. With a 1.1% decline in durable orders, companies appear to be shying
away from capital purchases. Similarly, inventories were flat in September
following August's gain of 0.4%, underscoring a trend of decreased investment.
     -Personal consumption spending may show a healthy uptick. With consumer
credit and sentiment remaining relatively strong in recent readings and stable
PCE numbers, this sector could bolster headline GDP. Hourly earnings have been
steadily rising since April, implying more spending money for workers.
     -Despite rising geopolitical tensions, the trade deficit appears stable,
with September's $54.9 billion deficit close to August's $54 billion. Exports
and imports have ticked up as well, indicating a positive gain for GDP.
     -The labor market has remained tight, with jobless claims orbiting the
normal count of 215,000. Unemployment is also expected at 3.6%, a slight rise
from last month's 3.5% reading that matched the lowest in decades.
--MNI Washington Bureau; +1 202 371 2121; email: alexandra.kelley@marketnews.com
[TOPICS: MAUDS$,MAUPR$,M$U$$$]

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