Slowing US growth could be good for investors

The first report card of the year for the American economy is due on Friday. Hold tight.Investors will be watching closely after worries about a global and US economic slowdown weighed on their minds at the start of the year.

The Federal Reserve Bank of Atlanta estimates 2.8% real GDP growth in January through March, while analysts polled by Refinitiv forecast an average of 1.9%. A weaker than expected GDP reading could pull stocks and other assets lower.

Government stimulus, like tax reform, boosted the economy last year, but that’s now petering out. The US economy is widely expected to grow at a slower speed in 2019 than last year’s 2.6%.

First quarter growth tends to be weaker due to seasonal factors. This year, the data will also reflect the partial government government shutdown, the longest in US history, which started in December but went on for much of January.”Slowing down is fine, as long as there is no recession,” said Brent Schutte, chief investment strategist at Northwestern Mutual.

The more than 4% annualized growth figure the United States reported for the second quarter of 2018 was certainly outside the trend. GDP slowing to what many economists say is a more sustainable level will keep inflation around 2%, the Federal Reserve’s target, and will prolong the economic growth cycle, Schutte said. On the back of that, fears of an impending recession are letting up, he added.

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