The US economy is showing signs of a slowdown, leaving President Donald Trump with a problem as he heads into a 2020 re-election campaign.

GDP - gross domestic product and the broadest measure of economic health - grew at a moderate 2% annual rate in the April to June quarter, below the initial estimate of 2.1%.

It is also below the Trump administration's 3% target, which was also missed in 2018, according to a revision last month.

The Economy is doing GREAT, with tremendous upside potential! If the Fed would do what they should, we are a Rocket upward! — Donald J. Trump (@realDonaldTrump) August 29, 2019

Despite this, Mr Trump appears not to be worried, tweeting that the economy is "doing great" and blaming the Federal Reserve for holding it back.

Consumer spending - more than two-thirds of US economic activity - was up by 4.7% in the second quarter of 2019, the best figure for more than four years.


But even this could not make up for a decline in exports and the uncertainty sparked by Mr Trump's trade war with China.

Business investment, manufacturing, the trade deficit and the markets have all felt the effects of the year-long dispute, leading some economists to forecast a recession as early as next year.

Business investment was down 0.6% in the second quarter, the first decline since the beginning of 2016, and spending on house-building was down for a sixth consecutive quarter.

Image: Spending on house-building was down for a sixth consecutive quarter

In a survey last week, 74% of business economists said the US would see a recession by the end of 2021 and about a third thought it would arrive next year.

This would mean another blow to Mr Trump's 3% GDP growth promise, a promise he had hoped would be made easier by low unemployment, rising wages and the resulting consumer confidence.

Economists expect growth in the third and fourth quarters of this year to sit at around 1.8%.

Image: Markets fear a recession, as the US-China trade war starts to bite

Mark Zandi, chief economist at Moody's Analytics, says he does not think the US will see a recession within the next 18 months, but warns that it can not be ruled out as long as the trade war continues.

He said: "If the president continues to ratchet up the rhetoric and his tariffs on China, it will continue to unnerve business people who are already being more cautious with their investment plans.

"The risks of going into a recession are high if the president keeps escalating his trade war."