Reuters
- 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 said he still expected GDP to grow by 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 said they expected 2020 GDP growth to land at 1.8%.
- Watch Boeing trade live here.
- Visit Business Insider’s homepage for more stories.
Boeing’s 737 Max debacle could cut US gross domestic product by 0.5 percentage points in 2020, Treasury Secretary Steven Mnuchin said on Sunday.
Mnuchin told Fox News that the US economy could still expand by 2.5% as waning global uncertainties and trade-deal breakthroughs boost key industries.
“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, adding that “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 in January said they expected yearly GDP growth to land at 1.8%, down from 2.3% in 2019. Respondents also pegged the odds of a recession in the next year at 30%.
The 737 Max, Boeing’s bestselling model, has been grounded worldwide since March after two fatal crashes in late 2018 and early 2019 killed 346 people. Scrutiny of 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 projection of a half-point GDP cut echoed those made by some analysts in mid-December. Boeing halted production of the beleaguered model this month, and Michael Feroli, JPMorgan’s chief US economist, has said that the lack of growing inventory could cut as much as half a percentage point from first-quarter GDP.
“The expected drag on 1Q GDP growth should be concentrated in reduced inventory accumulation,” Feroli wrote in a note on December 17. The bank said it expected 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.
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.
Now read more markets coverage from Markets Insider and Business Insider:
The Fed’s payments to the Treasury hit a decade low in 2019 as the repo crisis raged
Companies are on pace to pay more than $500 billion in dividends this year for the first time ever
