Hurricanes to Slow Down US Economic Growth

The American economy improved slightly faster versus its earlier estimate during the Q2, this is the fastest growth recorded after two years. However, the progress could possibly slow down in Q3 brought by the blow of Hurricanes Harvey and Irma. The GDP rose at an annualized rate at 3.1 percent from the months of April to June, according to the Commerce Department on Thursday.

US economic status in the last quarter was considered the fastest since the Q1 of 2015, after the 1.2 percent progress from January to March. According to economists, the huge storms Harvey and Irma that hit Florida and Texas has the tendency to cutback six-tenths of GDP percentage point in the third quarter.

The home building, home sales,  industrial production, and retail sales dropped in August which was mainly blamed to hurricane Harvey. Moreover, the sluggish data is already expected in September due to the so-called ‘monster storm’ Irma. However, recovery plans are predicted to lift growth for the GDP in Q4 and also in 2018 earlier. The indications that show further improvement on business inventory investments could possibly ease down its effect towards the economy.

Other reports on Thursday states that the Commerce Department says, wholesale inventories grew by 1.0 percent for the month of August and 0.6 percent in July subsequently. While retailer’s inventories perked up by 0.7 percent and remained steady in July.  On one hand, the department added that goods trade deficit declined to 1.4 percent ($62.9 billion) last month, which led to an upside risk to growth forecast below 2.5 percent for the fourth quarter.

The aftermath of the previous storms Harvey and Irma continue to affect even the labor market which is projected to a weak growth on jobs for the current month. Based on the third readings of the Labor Department, the initial claims for unemployment insurance benefits rose to 12,000 according to a seasonally adjusted 272,000 for the week until 23rd of September. Furthermore, prices of long-dated U.S. Treasuries traded in a lower rung, and DXY weakened against another group of currencies.