National economy growing at 2 percent in Q4, “far better” than many economists feared. Consumer spending rebounds.

Yesterday’s post on Gov. Inslee’s proposed supplemental budget pointed out the state’s continued strong economic growth. Today comes some reassurance about the national economy, on which much of our state depends. The Associated Press reports,

The U.S. economy, which only recently was flashing warning signs of a sharp slowdown, should finish the year in better shape, thanks to rate cuts from the Federal Reserve and a cease-fire in the U.S.-China trade war…

Economists, who had been worried growth might all but disappear in the current October-December quarter, now believe the GDP is growing around 2% in the current quarter as well and are looking for that moderate pace to be sustained in the early part of 2020.

That 2 percent pace

…is far better than the recession many analysts feared could occur just a few months ago when financial markets were being roiled by rising tensions in the U.S.-China trade dispute and a global economic slowdown.

Consumer spending continues to beat expectations, another AP story reports.

Americans increased their spending in November at the fastest pace in four months, and income growth rebounded to its strongest gain since August.

The Commerce Department said Friday that consumer spending rose at a 0.4% annual rate last month, led by a jump in spending on durable goods like autos. It was up from a more modest annual gain of 0.3% in October, and it was the best showing since July…

Economists are expecting consumer spending, which accounts for about 70% of economic activity, to remain solid in the final three months of the year to support continued moderate economic growth.

So far, so good. But economists anticipate a bumpy 2020.

…analysts are forecasting that growth will slow further in 2020, hurt by such factors as continued uncertainty about future trade negotiations with China, a temporary halt in production of Boeing’s troubled 737 Max.

Another headwind could be the 2020 presidential election which is expected to raise business anxiety about the future course of government policies given the sharp differences between Trump and his Democratic challengers.

‘”I think next year is shaping up to be a rather pedestrian economy,””said Mark Zandi, chief economist at Moody’s Analytics.

Economist Beth Akers writes,

This level of GDP growth reflects an economy in moderate expansion. The growth is fueled by record low levels of unemployment and is certainly being helped by the expansionary interest rate policy employed by the Federal Reserve in recent cycles. 

With most forecasts predicting moderately slower growth in 2020, I anticipate a series of less encouraging GDP reports in the coming months.

A good time to make only modest adjustments in the state’s biennial budget.