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The Outsized Effect of Trade on Growth

Markets

While the economy surged ahead in the second quarter, posting 4.1% Real GDP growth, JPMorgan has sounded a cautionary tone. The reason: 1.1% of the 4.1% growth was surprisingly due to net exports (which was a consistent detractor throughout the expansion), likely caused by a one-time accounting adjustment related to the new tax reform.

Overall, JPM believes the economy remains healthy but has not entered a new phase of growth. Specifically, the firm cited higher mortgage rates and housing prices impacting the market for new homes, and trade uncertainties depressing business spending, as reasons to temper enthusiasm going forward.

Source: JPM Weekly Market Insights


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