- A JPMorgan analyst released a note detailing how Boeing’s 737 Max groundings could have a negative impact on the US’s second-quarter GDP.
- The larger impact of Boeing’s issue — including civilian aircraft deliveries — could reduce GDP growth by 0.1%, according to JPMorgan.
- The impact could have been worse had aircraft inventories not remained steady through March and May, according to the analyst.
- Watch Boeing trade live here.
One JPMorgan analyst believes Boeing’s 737 Max issue isn’t just harmful for the aircraft manufacturer — he estimates it will negatively affect second-quarter GDP in the US.
News of the planes’ technical problems and resulting aircraft groundings began late in the first quarter, which means most of the impact was felt in the second quarter, according to JPMorgan analyst Daniel Silver.
The Federal Reserve’s Industrial Production report showed airplane and part outputs dropping 2.3% in April and 2% in May. Aircraft shipments account for approximately 0.6% of economic output, so a 9% decrease in production would negatively impact GDP growth by roughly 0.1%, Silver says.
But it gets worse. JPMorgan says Boeing’s controversy affects other sectors related to commercial air.
Still, Silver says the impact on the US economy could have been worse. Aircraft inventories rose by $3 billion between March and May, almost equaling the amount lost from the drop in shipments. Had inventories not grown at that rate, Silver estimates GDP growth would be reduced by 1.6%.
The company’s stock is up 16.8% year-to-date. It currently has 18 “buy” ratings, 10 “hold” ratings, and two “sell” ratings from Wall Street analysts, according to Bloomberg data.
Boeing is set to announce its quarterly earnings July 24.
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