Festering worries about the spread of COVID-19 is a potential peril for the U.S. economy, but ailing manufacturers and tepid investment are already muzzling growth.

Wall Street has been hoping for fresh signs of a rebound in business spending, but the first batch of reports for February is unlikely to deliver any grounds for optimism.

To be sure, the recently signed trade truce with China and a new free-trade agreement with Mexico and Canada have erased much of the uncertainty that companies coped with last year. The hope was that exports would rebound and investment would accelerate.

The spread of a novel coronavirus in China, however, is likely to set back a recovery in the global economy, at least in the first half of the year. Global supply chains have been disrupted and that could keep a lid on imports and exports, especially if the viral outbreak becomes even worse.

The damage is likely to be visible very soon in surveys of manufacturers in the New York and Philadelphia regions conducted by the Federal Reserve each month.

See: MarketWatch Economic Calendar

“The inability to get parts from China has idled plants in Europe and North America,” economists at Northern Trust told clients. “Global manufacturing, which has been struggling amid trade frictions, is likely to remain in retreat for a good portion of 2020.”

Read: Industrial output slumps in January for fourth decline in past five months

Goldman Sachs on Friday said the crisis could be even more costly than it previously forecast, shaving as much as 0.6% off U.S. economic growth in the first quarter. That’s a pretty big chunk for an economy expanding about 2% a year.

The anxiety is evident on Wall Street.

Even though the Dow Jones Industrial Average

DJIA, -0.09%,

S&P 500

SPX, +0.18%

and the Nasdaq Composite Index

COMP, +0.20%

leapt to levels at or near records last week, though moves were more subdued on Friday ground as investors assessed developments in China for signs of an increase spread of the infectious disease that originated in Wuhan, China last year.

The 2020 presidential election, meanwhile, raises the possibility of a far-left Democratic candidate such as Bernie Sanders winning the nomination.Sanders has promised to raise taxes on businesses and wealthy people, increase regulations and redo the U.S. health care system if elected.

The uncertain 2020 outcome might be enough to keep businesses on the sidelines, economists say, until they see who emerges as the Democratic standard-bearer against President Trump. Other Democrats such as Joe Biden and Michael Bloomberg are viewed as more business friendly.

One part of the economy that is better insulated from the health crisis abroad and political uncertainties at home is the U.S. housing market. Tumbling mortgage rates have revived growth in the past six months and should continue to give builders a boost.

Look for a pullback in new construction in January, however, after a housing starts rose in December to the highest level since 2006. Funky weather is probably exaggerating the swings in starts.

Whatever the case, the newfound eagerness of Americans to buy more homes isn’t just the result of lower mortgage rates. Consumers are very confident in the economy owing to ultralow unemployment, rising wages and the strongest labor market in decades.

Read: Consumers feel good about the economy: sentiment returns near 15-year high

While businesses play the part of the tortoise, households have been the hares. Consumer spending is keeping alive a record economic expansion that is almost 11 years old and shows no sign of mortality.

“Bottom-line, lopsided U.S. economic growth driven by consumers, government spending, and housing activity remains in place, but the production and investment side of the economy continues to languish,” said Scott Anderson, chief economist of Bank of the West.

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2020-02-15