Boeing Co.'s unresolved crisis over its 737 MAX jets may reduce U.S. GDP growth in 2020 by up to 50 basis points as the company is one of the country's largest exporters, Treasury Secretary Steven Mnuchin said Jan. 12.
Mnuchin said in an interview with Fox Business that the Trump administration is expecting "very healthy" growth this year, although the ongoing 737 MAX crisis fallout could slow the expansion.
"For this year, we've been looking at 2.5 to 3%, as I said, it may be closer to 2.5 because of the adjustment of the Boeing numbers," Mnuchin said. "But this would have been 3% otherwise."
The aircraft manufacturer has announced plans to suspend production of the 737 MAX jets in January after failing to secure their re-certification, as regulators reiterated that there is no set timeline for restarting operations. The airplanes have been grounded since March 2019 following two crashes that killed 346 people.
In a move showcasing the impact of the 737 MAX crisis on the wider economy, Boeing parts supplier Spirit AeroSystems Holdings Inc. announced Jan. 10 that it would be laying off approximately 2,800 employees at its facility in Wichita, Kan., with additional workforce reductions scheduled this month for two other plants.
Similarly, Ryanair Holdings PLC announced plans for capacity reduction, more job cuts and base closures as it revised its schedule for summer 2020 due to further delays in the delivery of its Boeing 737 MAX orders.
Oxford Economics said in December 2019 that the 737 MAX fallout could cut U.S. economic growth by 0.5 percentage point in the first quarter of 2020, and result in $1.2 billion in lost wages if production cannot resume this year.
Mnuchin said the much-anticipated signing of the U.S.-China "phase-one" trade pact and the ratification of the U.S.-Mexico-Canada Agreement would "significantly" support economic growth this year.