US economic growth grew a worrying 1.2% well below the 2.5% rate expected in Q2 2016, raising more questions about the health of the US economy after growth in Q1 has been revised lower from 1.1% to 0.8%. Now that business investment has been down for 3 consecutive quarters, analysts wonder to what extent the US economy could be slowing down sharply and how much has the Brexit weighed on the investors’ mind.
Indeed, consumer sentiment slipped in line with UK’s PMI that fell more than expected at 48.2 instead of 49.1. The anemic pace of US growth in Q2 worried analysts about a similar if not worse Q3 which may signal the US economy could be “Europeanizing” itself toward a 1% rather than a 2% dynamic – for the first time since 2011 and the Euro area sovereign debt crisis – pushing any additional rate hike by the Fed further away.
The consequences of the Brexit remain unknown since the process of the UK’s exit from the European Union (EU) has yet to start from an institutional standpoint. The US Presidential Election also brings more interrogation than usual with both Democratic and Republican candidates questioning US Free Trade policy abroad, with the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) outstanding.