Business / Economy

Steve Mnuchin says Boeing woes could lop a half-point from U.S. GDP

Bloomberg

Troubles at aircraft maker Boeing Co. could trim about half a point from U.S. GDP in 2020 but economic growth should still come in at about 2.5 percent, said Treasury Secretary Steven Mnuchin.

Mnuchin discussed the growth outlook, plans to sign the first phase of a U.S.-China trade deal and new sanctions against Iran on Fox News Channel’s “Sunday Morning Futures.”

“The president’s economic program is really coming together,” Mnuchin said.

His assessment was more upbeat than many economists, who expect slowing growth. They say the economy had received a boost from the 2017 Republican tax cuts and from increased government spending, but that stimulus is starting to fade.

Economists surveyed by Bloomberg News this month forecast growth this year of 1.8 percent, down from an estimated 2.3 percent in 2019. They put the chances of a recession happening over the next 12 months at 30 percent.

Boeing’s 737 Max jetliner remains subject to a global flight ban after deadly accidents in late 2018 and 2019. The aftermath has cut more than $50 billion off the plane-maker’s market value, and it’s unclear when the grounded airplanes will be back in operation.

The U.S. and China are slated to sign a “phase one” trade deal this week that includes Chinese commitments to respect American intellectual property, not manipulate its currency and engage in a $200 billion spending spree on U.S. farm products and other goods.

The U.S. in return suspended plans to slap tariffs on some $160 billion of Chinese products while reducing duties on some others.

Mnuchin said an English-language version of the detailed agreement will be released this week and a suggestion that some items already agreed to had been watered down over the past few weeks.

President Donald Trump told reporters on Jan. 9 that he wants to start negotiations on phase two “right away,” but might not finish those until after the U.S. presidential election in November.

Those negotiations would address long-standing American complaints not covered in the initial 86-page agreement, including Chinese government subsidies to its companies.

The Treasury Department separately is advising the Trump administration to revive twice-yearly talks with China to discuss the economic relationship between the countries, according to people familiar with the matter.

Such discussions, which would be separate from the phase two negotiations, would harken back to the strategic economic dialogue begun in 2006 when George W. Bush was president and which have been derided by China critics as mere talking shops.