The US economy is expected to achieve moderate growth in the fourth quarter of 2019, likely to fail again to meet President Trump’s administration’s 3% growth target for the year due to shrinking business investment against the backdrop of commercial turmoil between Washington and Beijing.

A review of the US Department of Commerce’s gross domestic product (GDP) is likely to show that three interest rate cuts, made by the Federal Reserve last year, have helped maintain the longest-growing economy in the history of the United States, entering its 11th year. But economic growth is slowing as White House incentives fade amid huge tax cuts introduced by the Republicans in 2018, despite Trump’s hopes that these measures will accelerate growth beyond the 3% mark.

The news was preceded by a meeting of the Fed’s Monetary Policy Committee on Wednesday (January 29th), at which the central bank decided to continue buying short-term government securities worth 60 billion USD annually through April. Fed Governor Jerome Powell said after the meeting that the regulator expects “moderate economic growth to continue” but also signaled some risks, including continued expansion of the coronavirus beyond China.

The Trump administration’s 18-month trade war with China has resumed fears of a recession. Although economic prospects have improved with the signing of the first phase agreement, economists do not see any positive economic impetus as US duties remain on 360 billion USD worth of Chinese imported goods.

“The economy is obviously slowing down but not heading for recession”, says Ryan Sweet, senior economist at Moody’s Analytics.

US GDP is projected to grow by 2.1% year-on-year in the fourth quarter, as lower borrowing costs have spurred purchases of motor vehicles, houses, and other larger items. At the same time, lower import costs and higher government spending maintained a growth rate similar to that of the third quarter.

However, the forecast was made before Wednesday’s data was released, which showed a sharp increase in trade deficits in December to 68.3 billion USD.

These figures prompted some economists to lower their fourth-quarter GDP growth estimate to 1.4%. Growth forecasts for 2019 reach an average of 2.5%, which is less than the growth recorded in 2018 of 2.9%.