Bloomberg The U.S. economy is still expanding fast enough to keep the threat of recession at bay, but the warning signs are mounting.
A pair of surveys of top business executives suggest growth tapered off in August to the slowest pace in three and a half years. Companies are more worried about the economy at home and abroad and are tightening their budgets as a precaution, according to the business-research firm IHS Markit.
The IHS Markit flash index of manufacturing conditions for August, for example, slipped below the breakeven point of 50 for the first time since September 2009 — a few months after the Great Recession ended. The preliminary reading for August fell to 49.9 from 50.4.
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The gauge measuring the much larger service side of the U.S. economy, meanwhile, dipped to 50.9 from 53 in July.
Any number above 50 signifies growth, but figures below that mark signal contraction.
Similar surveys of the economy, to be clear, don’t show quite as much weakness, but various measures have shown the U.S. is no longer growing as rapidly as it was last year.
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Tim Moore, economics associate director at IHS, said companies are resetting their budgets and are likely to spend and hire less in the months ahead. They’ve also become more negative about the future.
“Business expectations for the year ahead became more gloomy in August and remain the lowest since comparable data were first available in 2012,” he said.
Although the U.S economy is still doing fairly well, most countries around the world are suffering from weaker growth. That’s cut into American exports and acted as a drag on manufacturers.
Many economists blame the U.S. trade fight with China for contributing to the global slowdown, which in turn is beginning to weigh on the American economy.
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They contend the domestic and global economies will remain under pressure until the U.S. and China resolve their trade disagreements, but a solution does not appear in sight.
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Central banks around the world are cutting interest rates to try to spur growth and the Federal Reserve might do so again in September, but rates have been low for years.