New York — US economic growth is poised to slow this year to 2.2%, from 2.9% in 2018, reflecting weaker private nonresidential investment spending growth, according to a report from S&P Global.
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US prices of hot-rolled steel coil were already down 13.2% to $695/st in Q1 2019 compared with $801/st in Q4 2018.
US GDP and domestic steel pricing have long been linked. Last year, when GDP grew at that 2.9% rate, the price of US-made hot-rolled steel coil averaged $833/st - the highest annual average price since 2008.
"Slower global growth, trade tensions, and a moderation in fiscal stimulus have weakened investor confidence, with markets pricing in a rate cut by December 2019," said S&P Global US Chief Economist Beth Ann Bovino.
S&P Global is the parent company of S&P Global Platts.
"However, the household sector, which accounts for two-thirds of overall economic output, remains healthy, supporting a still-solid domestic economy." Bovino added: "While we currently expect no rate hikes this year, if the recent weakness is only a soft patch and not quicksand, the Fed may surprise markets and decide to sharpen its monetary tools later this year, with a rate hike just in time for the holidays."
Still, S&P Global continues to place overall odds of a recession 12 months out at the 20%-25% range set in February, "though we recognize that recent financial market turmoil adds headwinds to this assessment," said Bovino.
Generally, when GDP grows at a rate of nearly 3% or more, the steel sector also performs well.
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