Huawei CEO Ren Zhengfei laid out plans to bring more efficiencies to the organization. This included simplifying the reporting structure, cutting down on surplus staff, axing...Technologyread more
The bond market has entered a financial twilight zone, and at this point, there doesn't seem to be a smooth way out.Market Insiderread more
China has used both monetary and fiscal measures to lift economic activity as its trade war with the U.S. looks set to intensify in the coming months.China Economyread more
President Donald Trump said on Twitter he was postponing a scheduled meeting with Denmark's prime minister because of her lack of interest in discussing a possible sale of...World Politicsread more
"I think (rate cuts) will help, but whether they're going to be sufficient to counter the negative trade pressures and global growth slowdown and impact is debatable," one...Central Banksread more
Chinese overseas investment growth will likely slow or even decline in the next few years as risks around the world increase, according to new research by Moody's Investors...China Economyread more
The two countries want to smash the civil aerospace duopoly enjoyed by Airbus and Boeing.Aerospace & Defenseread more
Alibaba held a board meeting before its latest quarterly earnings release last week, during which the board decided to postpone the Hong Kong listing, Reuters reported.Technologyread more
Federal Reserve Chairman Jerome Powell is set to deliver his annual speech on Friday at the Jackson Hole, Wyoming symposium, where he's expected to provide more clarity on the...Asia Marketsread more
U.S. and Asian investors poured $3.7 billion into U.K. tech start-ups in the first seven months of 2019, research shows.Technologyread more
After Elon Musk touts Tesla solar on Twitter, Walmart sues the electric vehicle and clean energy company over store rooftop panels that ignited.Technologyread more
(John Kemp is a Reuters market analyst. The views expressed are his own)
* Chartbook: https://tmsnrt.rs/2MiFGcP
LONDON, July 26 (Reuters) - The U.S. economy is currently split between a fast-growing consumer sector and a much slower-growing business sector, with the contrasting speeds confirmed by the latest figures for second quarter gross domestic product.
Personal consumer expenditures adjusted for inflation increased at an annualized rate of 4.3% in the three months from April to July, according to advance estimates published by the Bureau of Economic Analysis on Friday.
Real consumer spending growth accelerated from just 1.1% in the previous three months and was the fastest since the end of 2017, with a broad-based pick-up in spending on durables, non-durables and services.
By contrast, business investment in new structures, equipment and intellectual property shrank at an annualized rate of 0.6%, the worst performance since the first quarter of 2016.
Final sales to private domestic purchasers, which excludes short-term volatility from foreign trade, inventories and government spending, and is the best measure of underlying momentum, accelerated to 3.2% from 1.6% in the first three months of the year.
High levels of employment, wage growth, consumer confidence and rising share prices are supporting very brisk increases in consumer spending.
But the trade conflict with China and concern about a future slowdown in growth, or even a recession, are holding back business investment.
The gross domestic product estimates are consistent with a broad range of other indicators that show a twin-speed economy (https://tmsnrt.rs/2MiFGcP).
Passenger transportation numbers have accelerated since the start of the year even as freight volumes have come close to stalling.
Retail sales show strong and quickening growth while manufacturing output is stalling, purchasing managers surveys point to the most sluggish conditions since 2016, and construction activity is falling.
The Federal Reserves policymaking Federal Open Market Committee is widely expected to reduce short-term interest rates when it meets next week.
The case for an interest rate cut rests on the need to create a firebreak to prevent the current weakness in the business sector, manufacturing and construction from spreading to the much larger consumer sector and services.
Early and aggressive cuts in interest rates could help the economy avert a business cycle recession as they did in 1998.
But with so much momentum on the consumer side of the economy already, they risk igniting an unsustainable increase in consumer and business borrowing that could contribute to a subsequent downturn.
- Fed will try to create firebreak to contain downturn (Reuters, July 19)
- Fed likely to cut interest rates if U.S. manufacturing continues to slow (Reuters, May 2)
- Oil and equities prepare to party like it's 1999 (Reuters, March 19)
(Editing by Frances Kerry)