The <a href="https://www.wionews.com/world/fate-of-wto-top-court-threatened-with-trump-administrations-move-to-block-new-appointments-267597">Trump administration</a> is finalising a set of narrow rules to limit exports of sophisticated technology to adversaries like China, a document seen by Reuters shows, in a boon to US&nbsp;industry that feared a much tougher crackdown on sales abroad.

The Commerce Department is putting the finishing touches on five rules covering products like quantum computing and 3-D printing technologies that were mandated by a 2018 law to keep sensitive technologies out of the hands of rival powers.

Before drafting the rules, Commerce sought industry comment last year on a raft of high-tech sectors that it could cover under the law, from artificial intelligence technology to robotics. That fuelled concerns among US&nbsp;businesses the department would craft broad, tough regulations that would stymy a host of exports to key customers.

But the internal status&nbsp;update seen by Reuters shows for the first time that Commerce is finishing a first batch of rules that touch on just a few technologies that will be proposed to international bodies before taking effect, a reprieve for US&nbsp;companies.

"Based on their titles, the rules appear to be narrowly tailored to address specific national security issues, which should go a long way to calming the nerves of those in industry concerned that the administration would impose controls over broad categories of widely available technologies," said Kevin Wolf, former assistant secretary of commerce for export administration. &nbsp;&nbsp;

Commerce declined to confirm any details but said it has a number of proposed rules in the review process.

Despite the apparent reprieve, Commerce could issue more rules in the future regulating sales abroad of cutting-edge items. The document failed to outline when the rule proposals would be made public or what the controls would look like for specific countries, buyers and&nbsp;uses.

In a move that should appeal to US&nbsp;firms, the rules will be submitted to international bodies for approval so that they may be implemented overseas, not just by the United States. That would establish a level playing field for US&nbsp;companies abroad, but would also take much longer to review and go into effect, likely until mid-2021 at the earliest.

Commerce is expected to seek industry comment on the rules before submitting them to the groups, a source said, adding that a sixth rule, covering artificial intelligence, will go into effect in the United States without a comment period.

The revelations come amid growing frustration from Republican and Democratic lawmakers over the slow pace of the rule roll-out, with Senate minority leader Chuck Schumer urging the Commerce Department to speed up the process.

In a statement to Reuters, Republican Senator Tom Cotton said he was "disappointed at the lack of political will" at the Commerce department, accusing it of a "troubling" lack of urgency.

"While bureaucrats and industry shills twiddle their thumbs, the <a href="https://www.wionews.com/opinions/standing-up-to-chinas-alleged-human-rights-abuses-265914">Chinese Communist Party</a> continues to purchase sensitive US&nbsp;technologies with clear military applications," he said. "I will be digging deep into the Commerce Department's actions."

"China firmly opposes the US' generalisation of the concept of national security and abuse of export control measures to interfere with and restrict the normal communications and cooperation between businesses," Chinese foreign ministry spokesman Geng Shuang said at a regular briefing in Beijing on Wednesday, when asked about the rules.

Limiting tech exports will not disrupt China's innovation or development, said Geng.

According to the status&nbsp;update, the agency plans to regulate exports of quantum diluted refrigerators, which are&nbsp;used to keep qubits cold in some quantum machines. Qubits are&nbsp;used in quantum computers to perform calculations that would take conventional computers thousands of years.

Major makers of the refrigeration devices include UK-based ICE Oxford, Finland-based Bluefors and US-based Janis Research. The rules would apply to exports of goods from the United States as well as shipments of items made abroad that contain a significant amount of US&nbsp;technology or components.

That rule was sent to the Commerce Department's Office of Policy and Strategic Planning on November&nbsp;19, along with another rule regulating 3-D printing for explosives, the document shows.

Another regulation on exports of the so called "Gate-All-Around Field Effect transistor technology, which is&nbsp;used to manufacture semiconductors, was awaiting comments from other agencies on December&nbsp;5.

The transistors are expected to play a major role in newer, faster semiconductors that are under development by Taiwan Semiconductor Manufacturing Co, <a href="https://www.wionews.com/business-economy/samsung-electronics-board-chairman-jailed-on-union-busting-charge-268655">Samsung Electronics</a> Co Ltd&nbsp;and Intel Corp.

Two other rules would regulate chemicals&nbsp;used to make Russian nerve agent Novichok and single-use chambers for chemical reactions.

The Trump administration is finalising a set of narrow rules to limit exports of sophisticated technology to adversaries like China, a document seen by Reuters shows, in a boon to US industry that feared a much tougher crackdown on sales abroad.

The Trump administration is finalising a set of narrow rules to limit exports of sophisticated technology to adversaries like China, a document seen by Reuters shows, in a boon to US industry that feared a much tougher crackdown on sales abroad. The Commerce Department is putting the finishing touches on five rules covering products like quantum computing and 3-D printing technologies that were mandated by a 2018 law to keep sensitive technologies out of the hands of rival powers. Before drafting the rules, Commerce sought industry comment last year on a raft of high-tech sectors that it could cover under the law, from artificial intelligence technology to robotics. That fuelled concerns among US businesses the department would craft broad, tough regulations that would stymy a host of exports to key customers. But the internal status update seen by Reuters shows for the first time that Commerce is finishing a first batch of rules that touch on just a few technologies that will be proposed to international bodies before taking effect, a reprieve for US companies. "Based on their titles, the rules appear to be narrowly tailored to address specific national security issues, which should go a long way to calming the nerves of those in industry concerned that the administration would impose controls over broad categories of widely available technologies," said Kevin Wolf, former assistant secretary of commerce for export administration. Commerce declined to confirm any details but said it has a number of proposed rules in the review process. Despite the apparent reprieve, Commerce could issue more rules in the future regulating sales abroad of cutting-edge items. The document failed to outline when the rule proposals would be made public or what the controls would look like for specific countries, buyers and uses. In a move that should appeal to US firms, the rules will be submitted to international bodies for approval so that they may be implemented overseas, not just by the United States. That would establish a level playing field for US companies abroad, but would also take much longer to review and go into effect, likely until mid-2021 at the earliest. Commerce is expected to seek industry comment on the rules before submitting them to the groups, a source said, adding that a sixth rule, covering artificial intelligence, will go into effect in the United States without a comment period. The revelations come amid growing frustration from Republican and Democratic lawmakers over the slow pace of the rule roll-out, with Senate minority leader Chuck Schumer urging the Commerce Department to speed up the process. In a statement to Reuters, Republican Senator Tom Cotton said he was "disappointed at the lack of political will" at the Commerce department, accusing it of a "troubling" lack of urgency. "While bureaucrats and industry shills twiddle their thumbs, the Chinese Communist Party continues to purchase sensitive US technologies with clear military applications," he said. "I will be digging deep into the Commerce Department's actions." "China firmly opposes the US' generalisation of the concept of national security and abuse of export control measures to interfere with and restrict the normal communications and cooperation between businesses," Chinese foreign ministry spokesman Geng Shuang said at a regular briefing in Beijing on Wednesday, when asked about the rules. Limiting tech exports will not disrupt China's innovation or development, said Geng. According to the status update, the agency plans to regulate exports of quantum diluted refrigerators, which are used to keep qubits cold in some quantum machines. Qubits are used in quantum computers to perform calculations that would take conventional computers thousands of years. Major makers of the refrigeration devices include UK-based ICE Oxford, Finland-based Bluefors and US-based Janis Research. The rules would apply to exports of goods from the United States as well as shipments of items made abroad that contain a significant amount of US technology or components. That rule was sent to the Commerce Department's Office of Policy and Strategic Planning on November 19, along with another rule regulating 3-D printing for explosives, the document shows. Another regulation on exports of the so called "Gate-All-Around Field Effect transistor technology, which is used to manufacture semiconductors, was awaiting comments from other agencies on December 5. The transistors are expected to play a major role in newer, faster semiconductors that are under development by Taiwan Semiconductor Manufacturing Co, Samsung Electronics Co Ltd and Intel Corp. Two other rules would regulate chemicals used to make Russian nerve agent Novichok and single-use chambers for chemical reactions.

US finalising rules to limit sensitive tech exports to China, others: Report

The Trump administration on Wednesday gave&nbsp;<a href="https://www.wionews.com/world/united-states-china-trade-deal-may-not-be-signed-this-year-263497">Huawei</a>&nbsp;its second reprieve this week, allowing&nbsp;some&nbsp;suppliers&nbsp;to&nbsp;restart&nbsp;sales&nbsp;to the Chinese telecoms giant after it was placed on a trade blacklist over national security concerns six months ago.

The Commerce Department said it has begun issuing licenses for&nbsp;some&nbsp;companies to sell goods to&nbsp;Huawei, expanding the company's supplier base and providing long-awaited clarity to the industry that once sold it billions of dollars worth of goods.

It was not immediately clear which products had been approved for sale to the world's top telecommunications equipment maker. But&nbsp;Huawei&nbsp;Technologies Co Ltd, also the second-largest smartphone maker, has been anxiously awaiting a license for Alphabet Inc's Google to supply its mobile services to new models. <a href="https://www.wionews.com/business-economy/google-to-make-stricter-regulatory-policy-for-political-ads-to-curb-abuse-263489">Google</a> declined to comment.

A&nbsp;US&nbsp;official said of roughly 300 license requests, about half have been processed. Roughly half of those – or one-quarter of the total – have been approved and the rest have been denied.

A different person familiar with the process added that&nbsp;some&nbsp;licenses for&nbsp;sales&nbsp;of cell phone components and non-electronic components were approved.

"The Department is issuing these narrow licenses to authorize limited and specific activities which do not pose a significant risk to the national security or foreign policy interests of the United States," the Commerce Department said in a statement, without providing further detail.

The move came after the Commerce Department renewed the so-called temporary general license for the company for a third time on Monday, extending permission for&nbsp;Huawei&nbsp;to engage in limited transactions to assist&nbsp;US&nbsp;rural network operators.

The goodwill gestures come as the Trump administration is working to sign a phase one trade deal with China to end a tit-for-tat trade war that has roiled markets and hit global growth.

Many China hawks have voiced fears that the administration could relax sanctions on&nbsp;Huawei&nbsp;to appease Beijing and score a win on trade.

Republican Senator Marco Rubio said in a statement the company "poses a clear and growing threat to the economic and national security" of the United States and its allies.

"I strongly believe it's against America's national security interest to grant licenses for&nbsp;US&nbsp;exports that sustain or strengthen&nbsp;Huawei," he said, adding that the Commerce Department should inform lawmakers of what licenses were given.

But the Semiconductor Industry Association, a trade group, welcomed the Commerce Department's announcement, saying&nbsp;sales&nbsp;of the non-sensitive items help ensure the competitiveness of&nbsp;US&nbsp;chipmakers, "which is essential to national security."

"We hope license&nbsp;approvals continue to proceed in an appropriate and timely manner," the group added.

The United States has pending cases against&nbsp;Huawei&nbsp;for allegedly stealing American intellectual property and violating Iran sanctions. The administration has also lobbied&nbsp;US&nbsp;allies to keep&nbsp;Huawei&nbsp;out of next-generation 5G telecommunications infrastructure.&nbsp;Huawei&nbsp;denied the allegations.

The Trump administration put&nbsp;Huawei&nbsp;on a trade blacklist, citing national security concerns in May after trade talks broke down. Companies on the list are not allowed to receive shipments of&nbsp;US&nbsp;goods without a special license from the Commerce Department.

But in June,&nbsp;<a href="https://www.wionews.com/world/united-states-china-trade-deal-may-not-be-signed-this-year-263497">US&nbsp;President Donald Trump</a> said&nbsp;some&nbsp;sales&nbsp;would be allowed to the company, and&nbsp;US&nbsp;officials urged&nbsp;firms to apply for licenses, noting that they would be granted in cases where the items were readily available and did not compromise national security.

But until Wednesday, there had been no responses on the license requests.

Despite the good news, plenty of headwinds remain for&nbsp;Huawei, which is still awaiting rules from the Commerce Department that are expected to bar them from the&nbsp;US&nbsp;telecoms network.

"The White House isn't ready to pull the plug on&nbsp;Huawei&nbsp;because that would do almost as much harm to&nbsp;US&nbsp;companies," said James Lewis, a technology expert with the Washington-based Center for Strategic and International Studies. "But they're keeping it in reserve," he added.

The Trump administration on Wednesday gave Huawei its second reprieve this week, allowing some suppliers to restart sales to the Chinese telecoms giant after it was placed on a trade blacklist over national security concerns six months ago.

The Trump administration on Wednesday gave Huawei its second reprieve this week, allowing some suppliers to restart sales to the Chinese telecoms giant after it was placed on a trade blacklist over national security concerns six months ago. The Commerce Department said it has begun issuing licenses for some companies to sell goods to Huawei, expanding the company's supplier base and providing long-awaited clarity to the industry that once sold it billions of dollars worth of goods. It was not immediately clear which products had been approved for sale to the world's top telecommunications equipment maker. But Huawei Technologies Co Ltd, also the second-largest smartphone maker, has been anxiously awaiting a license for Alphabet Inc's Google to supply its mobile services to new models. Google declined to comment. A US official said of roughly 300 license requests, about half have been processed. Roughly half of those – or one-quarter of the total – have been approved and the rest have been denied. A different person familiar with the process added that some licenses for sales of cell phone components and non-electronic components were approved. "The Department is issuing these narrow licenses to authorize limited and specific activities which do not pose a significant risk to the national security or foreign policy interests of the United States," the Commerce Department said in a statement, without providing further detail. The move came after the Commerce Department renewed the so-called temporary general license for the company for a third time on Monday, extending permission for Huawei to engage in limited transactions to assist US rural network operators. The goodwill gestures come as the Trump administration is working to sign a phase one trade deal with China to end a tit-for-tat trade war that has roiled markets and hit global growth. Many China hawks have voiced fears that the administration could relax sanctions on Huawei to appease Beijing and score a win on trade. Republican Senator Marco Rubio said in a statement the company "poses a clear and growing threat to the economic and national security" of the United States and its allies. "I strongly believe it's against America's national security interest to grant licenses for US exports that sustain or strengthen Huawei," he said, adding that the Commerce Department should inform lawmakers of what licenses were given. But the Semiconductor Industry Association, a trade group, welcomed the Commerce Department's announcement, saying sales of the non-sensitive items help ensure the competitiveness of US chipmakers, "which is essential to national security." "We hope license approvals continue to proceed in an appropriate and timely manner," the group added. The United States has pending cases against Huawei for allegedly stealing American intellectual property and violating Iran sanctions. The administration has also lobbied US allies to keep Huawei out of next-generation 5G telecommunications infrastructure. Huawei denied the allegations. The Trump administration put Huawei on a trade blacklist, citing national security concerns in May after trade talks broke down. Companies on the list are not allowed to receive shipments of US goods without a special license from the Commerce Department. But in June, US President Donald Trump said some sales would be allowed to the company, and US officials urged firms to apply for licenses, noting that they would be granted in cases where the items were readily available and did not compromise national security. But until Wednesday, there had been no responses on the license requests. Despite the good news, plenty of headwinds remain for Huawei, which is still awaiting rules from the Commerce Department that are expected to bar them from the US telecoms network. "The White House isn't ready to pull the plug on Huawei because that would do almost as much harm to US companies," said James Lewis, a technology expert with the Washington-based Center for Strategic and International Studies. "But they're keeping it in reserve," he added.

Some Huawei suppliers get US approval to restart sales to blacklisted firm

Huawei on Tuesday dismissed Washington's three-month delay to a<a href="https://www.wionews.com/world/us-gives-huawei-another-90-days-reprieve-from-ban-amid-economic-blacklist-244165"> ban on US firms selling to the Chinese tech giant</a> and said the decision would not change the fact it had been "treated unjustly".

The US Commerce Department effectively suspended for a second time tough rules stopping the sale of components and services to the telecoms titan and a prohibition on buying equipment from it.

However, it also said it would add 46 more companies to its list of Huawei subsidiaries and affiliates that would be covered by the ban if it is implemented in full taking the total on the list to more than 100.

The original ban was announced earlier this year by US authorities who claim it provides a backdoor for Chinese intelligence services something the firm denies.

"It's clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security," Huawei responded in a statement, adding that the actions "violate the basic principles of free-market competition."

"They are in no one's interests, including US companies. Attempts to suppress Huawei's business won't help the United States achieve technological leadership" Huawei said.

"The extension of the Temporary General License does not change the fact that Huawei has been treated unjustly."

Monday's move means Huawei can continue to buy US-made semiconductors and other materials crucial to its phones and network equipment, and that US telecommunications companies can continue to buy Huawei's networking equipment.

But China's foreign ministry spokesman Geng Shuang called on the US drop the ban altogether.

"No matter what the US does, it cannot change the erroneous nature of generalising the concept of national security, abusing export control measures, adopting discriminatory unfair practices against specific enterprises in other countries, and even undisguised suppression, without having any evidence," Geng said at a regular briefing Tuesday.

"We urge the US to immediately stop this wrong approach," he said.

Huawei considered the world leader in superfast 5G equipment and the world's number two smartphone producer was in May swept into a deepening trade war between Beijing and Washington, which has seen punitive tariffs slapped on hundreds of billions of dollars of two-way trade.

The suspension of the ban does not signal a change in US concerns that Huawei equipment poses a national security threat or lift a general prohibition on the use of its 5G systems in the United States.

"As we continue to urge consumers to transition away from Huawei's products, we recognise that more time is necessary to prevent any disruption," Commerce Secretary Wilbur Ross said in a statement.

Earlier this month, Huawei unveiled its own operating system called HarmonyOS, highly anticipated software considered crucial for the tech group's survival as the looming ban could remove its access to Google's Android operating system.

Huawei on Tuesday dismissed Washington's three-month delay to a ban on US firms selling to the Chinese tech giant and said the decision would not change the fact it had been "treated unjustly".

Huawei on Tuesday dismissed Washington's three-month delay to a ban on US firms selling to the Chinese tech giant and said the decision would not change the fact it had been "treated unjustly". The US Commerce Department effectively suspended for a second time tough rules stopping the sale of components and services to the telecoms titan and a prohibition on buying equipment from it. However, it also said it would add 46 more companies to its list of Huawei subsidiaries and affiliates that would be covered by the ban if it is implemented in full taking the total on the list to more than 100. The original ban was announced earlier this year by US authorities who claim it provides a backdoor for Chinese intelligence services something the firm denies. "It's clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security," Huawei responded in a statement, adding that the actions "violate the basic principles of free-market competition." "They are in no one's interests, including US companies. Attempts to suppress Huawei's business won't help the United States achieve technological leadership" Huawei said. "The extension of the Temporary General License does not change the fact that Huawei has been treated unjustly." Monday's move means Huawei can continue to buy US-made semiconductors and other materials crucial to its phones and network equipment, and that US telecommunications companies can continue to buy Huawei's networking equipment. But China's foreign ministry spokesman Geng Shuang called on the US drop the ban altogether. "No matter what the US does, it cannot change the erroneous nature of generalising the concept of national security, abusing export control measures, adopting discriminatory unfair practices against specific enterprises in other countries, and even undisguised suppression, without having any evidence," Geng said at a regular briefing Tuesday. "We urge the US to immediately stop this wrong approach," he said. Huawei considered the world leader in superfast 5G equipment and the world's number two smartphone producer was in May swept into a deepening trade war between Beijing and Washington, which has seen punitive tariffs slapped on hundreds of billions of dollars of two-way trade. The suspension of the ban does not signal a change in US concerns that Huawei equipment poses a national security threat or lift a general prohibition on the use of its 5G systems in the United States. "As we continue to urge consumers to transition away from Huawei's products, we recognise that more time is necessary to prevent any disruption," Commerce Secretary Wilbur Ross said in a statement. Earlier this month, Huawei unveiled its own operating system called HarmonyOS, highly anticipated software considered crucial for the tech group's survival as the looming ban could remove its access to Google's Android operating system.

Huawei dismisses new suspension of 'unjust' US ban

The US economy likely grew at its slowest pace in more than two years in the second quarter as an acceleration in consumer spending was probably offset by weak exports and business investment.

The anticipated moderation in growth will come against the backdrop of rising risks to the economy's outlook, especially from a trade war between the United States and China as well as slowing growth overseas, which are seen encouraging the Federal Reserve to cut interest rates next Wednesday for the first time in a decade.

With a strong labour market supporting consumer spending, a recession is, however, not on the horizon. The Commerce Department will publish the second-quarter gross domestic product (GDP) report on Friday at 8:30 am EDT (1230 GMT).

"The slowing in the economy spooked the Fed and markets, but the sky is not falling," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "If we do get a recession next year it would be because we shot ourselves in the foot with the trade tensions."

Gross domestic product probably increased at a 1.8% annualized rate in the second quarter, also because of a smaller inventory build, according to a Reuters survey of economists, after surging at a 3.1% pace in the January-March period.

But with the volatile exports and inventory categories accounting for much of the expected step-down in GDP, the slowest growth pace since the first quarter of 2017 will likely mask some underlying strength in the 10-year economic expansion, the longest in history.

The survey was completed before the release of June wholesale and retail inventories as well as durable goods and goods trade deficit data, which led the Atlanta Fed to cut its forecast by three-tenths of a percentage point to a 1.3% rate.

The economy is slowing largely as the stimulus from the White House's $1.5 trillion tax cut package fades. The tax cuts together with more government spending and deregulation were part of measures adopted by the Trump administration to boost annual economic growth to 3.0% on a sustained basis.

The economy grew 2.9% in 2018 and growth this year is expected to be around 2.5%. Economists estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7% and 2.0%.

"As the benefits of fiscal stimulus fade and trade policy uncertainty and slowing global demand remain headwinds to business investment, US GDP growth should moderate," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The GDP report is also expected to show a pickup in inflation last quarter, but the overall trend likely remained benign. The government will also publish revisions to GDP data from 2014 through the first quarter of 2019.

Strong consumer spending

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, is expected to have surged after slowing to a 0.9% rate in the first quarter, the weakest in a year. Some of the slowdown in consumer spending early in the year was blamed on a 35-day partial shutdown of the government. Spending is being supported by the lowest unemployment rate in nearly 50 years, which is lifting wages.

The jump in consumer spending was, however, likely blunted by a sharp drop in exports, in a reversal of the strong growth experienced in the first quarter. Weak exports are expected to have resulted in the deterioration of the trade deficit in the second quarter. Trade is believed to have subtracted from GDP growth last quarter after contributing 0.94 percentage point in the January-March period.

The acceleration in consumer spending likely helped businesses to whittle down an inventory overhang, resulting in a smaller inventory build. While that probably weighed on GDP growth in the second quarter, it is a potential boost to manufacturing. Businesses have been placing fewer orders with factories while working through stockpiles of unsold goods, which contributed to undercutting manufacturing production.

Business investment was probably weak in the second quarter, with spending on equipment expected to have contracted again after declining at its steepest pace in three years in the January-March period.

Fed Chairman Jerome Powell early this month flagged business investment as one area of weakness in the economy, noting it had "slowed notably," and that this might "reflect concerns about trade tensions and slower growth in the global economy."

Design problems at aerospace giant Boeing have hurt business investment, with some spillover to exports.

Boeing reported its biggest-ever quarterly loss on Wednesday due to the spiraling cost of resolving issues with its 737 MAX airplane and warned it might have to shut production of the grounded jet completely if it runs into new hurdles with global regulators to getting its best-selling aircraft back in the air.

The plane was grounded worldwide in March after two fatal crashes in Ethiopia and Indonesia. Production of the aircraft has been reduced and deliveries suspended. Economists estimate the 737 MAX troubles cut at least two-tenths of a percentage point from GDP growth in the second quarter.

"There could be more noticeable effects on various growth components, with weakness in related equipment spending and exports and a partially offsetting increase in inventories," said Daniel Silver, an economist at JPMorgan in New York.

Business spending on structures, which include oil and gas well drilling, is expected to have declined last quarter. Spending on intellectual products, including research and development, likely increased.

Strong growth in government investment is expected, but spending on homebuilding likely contracted for a sixth straight quarter.

The US economy likely grew at its slowest pace in more than two years in the second quarter as an acceleration in consumer spending was probably offset by weak exports and business investment.

The US economy likely grew at its slowest pace in more than two years in the second quarter as an acceleration in consumer spending was probably offset by weak exports and business investment. The anticipated moderation in growth will come against the backdrop of rising risks to the economy's outlook, especially from a trade war between the United States and China as well as slowing growth overseas, which are seen encouraging the Federal Reserve to cut interest rates next Wednesday for the first time in a decade. With a strong labour market supporting consumer spending, a recession is, however, not on the horizon. The Commerce Department will publish the second-quarter gross domestic product (GDP) report on Friday at 8:30 am EDT (1230 GMT). "The slowing in the economy spooked the Fed and markets, but the sky is not falling," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "If we do get a recession next year it would be because we shot ourselves in the foot with the trade tensions." Gross domestic product probably increased at a 1.8% annualized rate in the second quarter, also because of a smaller inventory build, according to a Reuters survey of economists, after surging at a 3.1% pace in the January-March period. But with the volatile exports and inventory categories accounting for much of the expected step-down in GDP, the slowest growth pace since the first quarter of 2017 will likely mask some underlying strength in the 10-year economic expansion, the longest in history. The survey was completed before the release of June wholesale and retail inventories as well as durable goods and goods trade deficit data, which led the Atlanta Fed to cut its forecast by three-tenths of a percentage point to a 1.3% rate. The economy is slowing largely as the stimulus from the White House's $1.5 trillion tax cut package fades. The tax cuts together with more government spending and deregulation were part of measures adopted by the Trump administration to boost annual economic growth to 3.0% on a sustained basis. The economy grew 2.9% in 2018 and growth this year is expected to be around 2.5%. Economists estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7% and 2.0%. "As the benefits of fiscal stimulus fade and trade policy uncertainty and slowing global demand remain headwinds to business investment, US GDP growth should moderate," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. The GDP report is also expected to show a pickup in inflation last quarter, but the overall trend likely remained benign. The government will also publish revisions to GDP data from 2014 through the first quarter of 2019. Strong consumer spending Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, is expected to have surged after slowing to a 0.9% rate in the first quarter, the weakest in a year. Some of the slowdown in consumer spending early in the year was blamed on a 35-day partial shutdown of the government. Spending is being supported by the lowest unemployment rate in nearly 50 years, which is lifting wages. The jump in consumer spending was, however, likely blunted by a sharp drop in exports, in a reversal of the strong growth experienced in the first quarter. Weak exports are expected to have resulted in the deterioration of the trade deficit in the second quarter. Trade is believed to have subtracted from GDP growth last quarter after contributing 0.94 percentage point in the January-March period. The acceleration in consumer spending likely helped businesses to whittle down an inventory overhang, resulting in a smaller inventory build. While that probably weighed on GDP growth in the second quarter, it is a potential boost to manufacturing. Businesses have been placing fewer orders with factories while working through stockpiles of unsold goods, which contributed to undercutting manufacturing production. Business investment was probably weak in the second quarter, with spending on equipment expected to have contracted again after declining at its steepest pace in three years in the January-March period. Fed Chairman Jerome Powell early this month flagged business investment as one area of weakness in the economy, noting it had "slowed notably," and that this might "reflect concerns about trade tensions and slower growth in the global economy." Design problems at aerospace giant Boeing have hurt business investment, with some spillover to exports. Boeing reported its biggest-ever quarterly loss on Wednesday due to the spiraling cost of resolving issues with its 737 MAX airplane and warned it might have to shut production of the grounded jet completely if it runs into new hurdles with global regulators to getting its best-selling aircraft back in the air. The plane was grounded worldwide in March after two fatal crashes in Ethiopia and Indonesia. Production of the aircraft has been reduced and deliveries suspended. Economists estimate the 737 MAX troubles cut at least two-tenths of a percentage point from GDP growth in the second quarter. "There could be more noticeable effects on various growth components, with weakness in related equipment spending and exports and a partially offsetting increase in inventories," said Daniel Silver, an economist at JPMorgan in New York. Business spending on structures, which include oil and gas well drilling, is expected to have declined last quarter. Spending on intellectual products, including research and development, likely increased. Strong growth in government investment is expected, but spending on homebuilding likely contracted for a sixth straight quarter.

US economic growth seen slowing in second quarter

The U.S. Commerce Department said on Friday it may soon scale back restrictions on Huawei Technologies after this week’s blacklisting would have made it nearly impossible for the Chinese company to service its existing customers.

US may scale back Huawei trade restrictions to help existing customers