The condition will be the most unwelcome news for US President Donald Trump, who during the election campaign then made an oath to boost growth at the 4% level. In an effort to keep the promise, the center of the previous week the White House proposed a tax-rate cut
Finance Minister Steven Mnuchin said the concept of President Trump's taxation aims to reduce the business sector tax from 35% to 15%. In the plan also proposed incentives for companies that return their funds abroad and individual tax cuts, although there is no detail of the plan.
Yet the weakness in the US economy at the start of the year is believed to be consistent with the trend in recent years showing growth figures being depressed in the first quarter, but then improving by the end of the year. "US GDP figures are usually weak in the first quarter, so this is seen in line with seasonal trends," said Close Brothers Asset Management Investment Chief Nancy Curtin.
"We do not have the expected fiscal stimulus from Trump, an effect that can not be seen until the end of this year or early 2018," he said in connection with US economic conditions.
The annual growth rate in the first quarter of this year was 0.7% or less than 1%, far less than analysts expected compared to 2.1% in the last quarter. According to economists this slowdown is affected by stagnant consumer spending. "Household spending appears to be declining, as motor vehicle sales shrank from a record high last year," said Capital Economics Chief Economist Paul Ashworth.
According to him the transition of the warm season to winter also suppresses spending utilities. But he expects consumer spending to rebound when personal income shows healthy growth and data show that consumer confidence remains high. The labor market is also believed to be a boost for the US economy.
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