The U.S. economy faces challenges in the first quarter due to the coronavirus outbreak, analysts say. File photo by John Angelillo/UPI |
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Feb. 27 (UPI) -- The Commerce Department said Thursday the domestic economy grew moderately over the last three months of 2019 -- slightly more than 2 percent -- amid new challenges for the rest of 2020 related to the global coronavirus outbreak.
The department said the economy grew by 2.1 percent in the fourth quarter and 2.3 percent for the year, the same figures it estimated in its first report last month. The second estimate found no changes for 2019's overall growth performance.
Last year was the second straight in which economic growth failed to reach the Trump administration's 3 percent target.
The department said consumer spending, more government spending and a narrowing trade deficit were main factors for the moderate growth.
The second estimate was based on more complete source data than were available last month.
Analysts say it will be difficult for the economy to match Q4's 2.1 percent growth mark due to significant market influences of COVID-19, which has killed hundreds and spread from China to more than 40 nations.
Goldman Sachs this week projected first-quarter economic growth of 1.2 percent, saying more companies are cutting production because of coronavirus-related disruptions to supply chains. The investment bank told clients Thursday it expects U.S. companies will generate no earnings growth this year.
"We have updated our earnings model to incorporate the likelihood that the virus becomes widespread," said Goldman Sachs equity strategist David Kostin.
Effects are already being felt in tourism and travel-related businesses, and Apple has warned of lower sales and profits. COVID-19's influence hit Wall Street hard this week -- taking the Dow Jones Industrial Average for more than 2,000 points so far. The index was down nearly 500 points by midday Thursday.
