Treasury Secretary Mnuchin says Boeing's 737 Max disaster could erase half a point from GDP this year - and economists fear worse
- Boeing's 737 Max controversy could slash US gross domestic product by 0.5 percentage points in 2020, Treasury Secretary Steven Mnuchin told Fox News on Sunday.
- The Trump administration official still expects GDP to grow 2.5% through the year, citing fading global uncertainties and trade-deal breakthroughs.
- Mnuchin's GDP projection is rosier than those put forth by Wall Street analysts. Economists surveyed by Bloomberg in January expect 2020 GDP growth to land at 1.8%.
- Watch Boeing trade live here.
Boeing's 737 Max debacle could cut US gross domestic product by 0.5 percentage points in 2020, Treasury Secretary Steven Mnuchin said Sunday.The US economy is still set to expand 2.5% as waning global uncertainties and trade-deal breakthroughs boost key industries, Mnuchin told Fox News.Advertisement
"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. "There's no question that USMCA and the China deal are going to add significantly to growth."
Mnuchin's GDP expectation is more optimistic than those put forth by many on Wall Street. Economists surveyed by Bloomberg News in January expect yearly GDP growth to land at 1.8%, down from 2.3% in 2019. Respondents also peg the odds of a recession in the next year at 30%.The 737 Max, Boeing's best-selling model in history, has been grounded worldwide since March after two fatal crashes in late 2018 and early 2019 killed 346 people. Scrutiny around the company's handling of 737 Max safety issues has prompted numerous congressional hearings, downward pressure on the company's stock, and the resignation of CEO Dennis Muilenburg in late December.
The half-point GDP cut echoes projections made by some analysts in mid-December. Boeing halted production of the beleaguered model in January, and the lack of growing inventory would cut as much as half a percentage point from first-quarter GDP, Michael Feroli, JPMorgan chief US economist, said."The expected drag on 1Q GDP growth should be concentrated in reduced inventory accumulation," Feroli wrote in a December 17 note. The bank expects GDP growth in the first quarter to reach 1.25%.Boeing traded at $329.92 per share as of Friday's close, up 1.1% year-to-date.Advertisement
The jet manufacturer has 10 "buy" ratings, 16 "hold" ratings, and three "sell" ratings from analysts, with a consensus price target of $363.75, according to Bloomberg data.
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