The trade truce between China and the United States was short-lived. In a flurry of economic news following a fruitless negotiation round, the United States threatened new tariffs on all imports from China; China cancelled U.S. agriculture orders; China allowed its currency to devalue amid the market volatility; and the U.S. labeled China a currency manipulator. The prospects for a trade deal have diminished, to say the least.

However, our overall outlook for the United States has not changed. The majority of domestic economic activity is driven by consumption; a low dependence on exports makes the U.S. less exposed to the risks of a trade war. Our expectations already reflected slower growth and moderate inflation. While U.S. Treasury yields have fallen amid a flight to quality, we expect that the U.S. economy will continue to show its resilience.

We will discuss the latest setback in global relations in our upcoming Weekly Economic Commentary. In the meantime, factors driving our U.S. outlook to follow.

Key Economic Indicators

US Economic Outlook - August 2019 Chart