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Expand chart
Reproduced from LPL Research; Note: "Other components" includes housing, inventories, trade and government spending; Chart: Axios Visuals

The narrative of the U.S. economy lately has been strong consumer spending as the cornerstone of growth, offsetting lackluster business investment.

Driving the news: Economists pared down estimates for Q4 GDP — prompted by worse-than-expected economic data on Friday. The downgrades would have been worse, if not for retail sales figures that pointed to a solid, but slightly more cautious, consumer.

What's going on: The New York Fed now predicts the economy will grow just 0.4%, down from its prior forecast of 0.7%. Meanwhile, the Atlanta Fed trimmed its estimate to 0.3% from 1.0%.

  • Goldman Sachs cut its estimate too on Friday, per CNN, though at 1.9% it's far rosier than the regional banks' projections.

What they're saying: "Consumer spending has largely propelled GDP over the past two quarters, countering business spending’s noticeable drag on growth," analysts at LPL Financial write.

The big picture: President Trump's tax cut jolted business investment initially, but it "quickly dwindled," as the New York Times reports. Now spending by corporations on factories and other investments is contributing less to GDP than before Trump took office.

  • "Some conservative economists and business leaders say the effects of the tax cuts were undercut by uncertainty from Mr. Trump’s trade war, which is slowing global growth and prompting companies to freeze projects," the NYT notes.
  • "Other economists say the fizzle is predictable because high tax rates were not holding back investment."

Go deeper:

Go deeper

Report: "Clear evidence" China is committing genocide against Uyghurs

The scene in 2019 of a site believed to be a re-education camp where mostly Muslim ethnic minorities are detained, north of Kashgar in China's northwestern Xinjiang region. Photo: Greg Baker/AFP via Getty Images

Chinese authorities have breached "each and every act prohibited" under the UN Genocide Convention over the treatment Uyghurs and other Muslim minorities in China's Xinjiang province, an independent report published Tuesday alleges.

Why it matters: D.C. think-tank the Newlines Institute for Strategy and Policy, which released the report, said in a statement the conclusions by dozens of experts in war crimes, human rights and international law are "clear and convincing": The ruling Chinese Communist Party bears responsibility.

Updated 2 hours ago - Technology

Twitter sues Texas AG Ken Paxton

Texas Attorney General Ken Paxton at February's Conservative Political Action Conference in Orlando, Florida. Photo: Joe Raedle/Getty Images

Twitter on Monday filed a lawsuit against Texas Attorney General Ken Paxton (R), saying that his office launched an investigation into the social media giant because it banned former President Trump from its platform.

Driving the news: Twitter is seeking to halt an investigation launched by Paxton into moderation practices by Big Tech firms including Twitter for what he called "the seemingly coordinated de-platforming of the President," days after they banned him following the Jan. 6 Capitol insurrection.

7 hours ago - Politics & Policy

Senate retirements could attract GOP troublemakers

Sen. Roy Blunt (R-Mo.). Photo: Jim Lo Scalzo/EPA/Bloomberg via Getty Images

Sen. Roy Blunt's retirement highlights the twin challenge facing Senate Republicans: finding good replacement candidates and avoiding a pathway for potential troublemakers to join their ranks.

Why it matters: While the midterm elections are supposed to be a boon to the party out of power, the recent run of retirements — which may not be over — is upending that assumption for the GOP in 2022.