Monday, October 21, 2019

FT "Boeing is dragging down the US economy" (BA)

Following up on Friday's "The Broader Market Is Setting Up For A Move Higher"
A very smart piece in the Financial Times a few hours ago:
The decision on whether to let the 737 Max fly again may yet be an economic turning point

US Federal Reserve chairman Jay Powell says the cross-currents dragging on the US economy include trade and weak foreign demand. But there’s a less obvious item he might add to the list: Boeing. The woes of the aircraft manufacturer do not just drive news headlines, they drive American economic data as well. 

The grounding of the 737 Max jet after two tragic crashes has quietly lowered US growth, reduced productivity and trimmed earnings at a number of American companies. Boeing is no ordinary company. It is the largest manufacturing exporter in the US and a very large private employer. Its products cost hundreds of millions of dollars and require thousands of suppliers. It is no surprise that benching Boeing’s fastest-selling aircraft is having ripple effects throughout the economy. 

Private economists put the drag on growth from Boeing at around 0.25 percentage points in the second quarter. According to the White House Council of Economic Advisers, the damage was even greater: Boeing’s troubles cut gross domestic product from March through June by 0.4 percentage points. ...MUCH MORE

Meanwhile, continuing the thesis of the Friday post MarketWatch a half-hour ago:
Dow’s rises toward record but gains capped by 100-point drag from Boeing’s stock

Dow Industrials      26,774.55  +4.35 (+0.02%)
Dow Transports      10,643.84+135.10 (+1.29%)
S&P                         2,998.06 +11.86 (+0.40%)

If interested see also "For Company and For Country: Boeing and US-China Relations (BA)" from last March. 
BA is a pretty big deal.