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The economies of China, Europe, and Mexico showed new signs of stumbling on Tuesday, while the United States advanced, strengthening Washington's hand as it willingly indulged Trade.
U.S. Economic reports showed Tuesday that wages and salaries rose in the second quarter at their fastest pace for nearly a decade, while consumption in June also posted solid growth. Meanwhile, overall US economic output grew by 4.1% per year in the quarter, its best increase in three months since 2014.
However, other data show that the Mexican economy contracted in the second quarter; the euro area economy recorded growth of 1.4%, its lowest rate in three years; The Chinese economy "is facing new problems and new challenges," the Chinese Politburo said in a statement Tuesday. Regardless of tariffs or commercial conflict with the United States, he adds: "The external environment is changing in an obvious way."
The Trump administration announced that economic strength was a source of leverage to force rivals to make concessions. the United States on trade. These talks are entering a new phase, with new impetus to renegotiate the North American Free Trade Agreement, including the participation of the Mexican Presidential Administration and an agreement on tariffs against the US. Europe after a visit to Washington by the President of the European Commission
Jean-Claude Juncker.
In the meantime, the United States and China are making little progress in backstage efforts to revive formal trade negotiations.
"I would expect to see this divergence of economic growth between the United States and the other 2018" said
Bernard Baumohl,
He cautioned however that the United States would probably slow as well by 2019, especially as the boost from last year's tax cuts begins at # 39; fade.
The first round of US tariffs has begun to have an overall impact and the economic effects are likely to become more apparent if they remain in place and as other countries respond. But for many US trading partners, tariffs may be just one of many challenges they face.
The euro zone reached its highest level in 2018, after experiencing its fastest expansion in 2017. But growth has slowed sharply in the first three months of this year, a setback that policy makers and many economists initially attributed to exceptionally cold weather conditions and labor strikes in Germany and France. The failure of the economy to rebound in the second quarter shows that other forces may be at work
"It seems like the excuses are exhausting", said
Bert Colijn,
an economist at ING Bank. "Factors with a longer life span seem to have brought euro zone growth back to a lower cruising speed."
The difference between US and European growth in the second quarter is the largest since 2014 The Greek debt crisis. Business optimism in Europe has declined, but trade is only one factor. Stock markets have been facing turbulence due to uncertainty over Britain's bloc exit plans next year and a new Italian skeptical government on the euro. As a sign of optimism, the German DAX index is down 0.9% this year, compared with 5.4% for the US S & P 500 index.
Analysts have warned that part of the US force in recent months could be a temporary result of companies positioning themselves in response to tariff threats. US GDP growth was boosted in the second quarter by an explosion of exports, particularly soy, with trading partners moving to book purchases before China's retaliatory tariffs took effect.
"What Happened in the Second Quarter On the other hand, Europe experienced a slowdown in exports, which economists have attributed in part to the uncertainty surrounding the relations. with the United States and the United Kingdom
. The same scenario occurred in Mexico, where economic output contracted in the second quarter after a vigorous first quarter, according to data from the National Institute of Statistics released Tuesday.
Mexico's economic output contracted by 0.3% on an annualized basis. In the first quarter, production grew at an annualized rate of 4.6%.
After a good start to the year, private investment in Mexico was probably negative second quarter, said independent economist
Jonathan Heath.
He noted the uncertainty that emerged during the quarter on negotiations with the United States and Canada to redraw Nafta. Mexico was also uncomfortable following the July 1 presidential election won by the leftist candidate
Andrés Manuel López Obrador.
Trade tensions are also being felt in Beijing, where they add to the long-standing challenges of the Chinese economy.
The official Chinese index of manufacturing purchasing managers fell to 51.2 in June from 51.5 in June. published by the National Bureau of Statistics showed Tuesday. The reading was slightly lower than the expectations of economists, although still above the mark of 50 which is a demarcation of the contracting activity. A production subindex fell from 53.6 to 53.0 while the new orders index went from 53.2 to 52.3.
China's growth rates have been slowly declining for years, not only because of recent trade-related changes. move away from credit-led growth and exports to steer toward stronger domestic consumption.
It is not yet known how long the United States will be able to maintain a strong performance when so many countries have stammered. US growth has been spurred by tax cuts and increases in government spending.
The administration promised that its tax cuts would sustainably boost growth, but many economists believe that the effects are more likely to be temporary stimulus. "Difficult to say that the discrepancy will be brief, because in the short term the fiscal policy will be clearly in favor of the United States," said
Marco Valli,
Head of Macro Research at UniCredit Bank Milan. "That being said, when the tax cut is negative, it is highly unlikely that the US can decouple from the rest of the world and maintain higher growth rates.
-Anthony Harrup and Paul Hannon contributed to this article.
Write to Josh Zumbrun at [email protected]
Appeared in the print edition of August 1, 2018 under the title "Robust Growth Buoys United States in Battles Trade".
