Trump threatens new trade war with EU

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The US economy slowed in the second quarter, potentially undercutting one of President Donald Trump’s key electoral advantages going into next year’s election.

Second-quarter figures released on Friday showed that economic growth slowed to 2.1 per cent between April and June. This compares to GDP growth of 3.1 per cent in the first quarter. Though the figures topped most analysts’ expectations – experts had been expecting a slowdown based on other economic data – the figures indicate that the US economy is battling headwinds, including trade tensions with China. Responding to the figures, commerce secretary Wilbur Ross said the data proved the economy’s continuing strength.

Asked if there were signs that the US economy could be heading into recession next year, he said: “They are dying to have a recession. They can’t bear going into next year’s election with the economy the way that it is” – an apparent reference to Democrats.

Separately, the commerce department published revised figures on Friday that showed the US economy grew by 2.5 per cent in 2018 – lower than the 3 per cent target pushed by the Trump administration.

Monetary action

The latest economic data increased speculation that the Federal Reserve could take monetary action at its policy meeting next week. The Fed, and its chairman Jerome Powell, have been a constant target of attacks in recent months by Mr Trump, who has been calling for an interest rate cut.

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