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Economic Slowdown: Trump’s Problems Look Bigger than Jinping’s

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Economic slowdown

The global economy is expected to grow at a slower pace this year than last year. Almost all major economies are expected to report lower growth in 2019.

Earlier this year, China (FXI) (TCEHY) set a growth target of 6.0%–6.5% for 2019. The country had set a target of 6.5% in 2018. The World Bank expects the Chinese economy to grow 6.2% this year compared to 6.6% last year.

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The US economy is also expected to slow down considerably this year. In its March policy meeting, the Federal Reserve said that it sees the US economy expanding 2.1% this year, down from the 2.3% it projected in December. The Fed also lowered its 2020 growth forecast by ten basis points to 1.9%. The US economy grew 2.9% last year, slightly below the 3% President Donald Trump was targeting.

US economy

Looking at the projections, in percentage terms, the US economy is expected to see a much sharper slowdown than China. While headline economic data points from China (BABA) (BIDU) continue to look dismal, we’ve seen some positive signals emerging. The country’s March PMI (purchasing managers’ index) was better than expected. We’ve seen a rebound in fixed-asset investments, and retail sales have shown signs of stabilization.

Chinese economy

While China’s measures to control the slowdown are expected to start yielding results in the coming months, the US economy may need some stimulus to shore up growth. While President Trump has frequently highlighted China’s slowdown, the US economy is also not looking as strong as it did last year.

However, stocks have rebounded from their fourth-quarter lows. The Invesco QQQ Trust, Series 1 ETF (QQQ) has risen 19.3% YTD (year-to-date) based on yesterday’s closing price. FAANG stocks Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG) have risen 34.3%, 21.1%, 24.6%, 37.4%, and 17.3%, respectively, YTD.

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