WASHINGTON (Reuters) - Boeing Co’s (BA.N) decision to stop production of its best-selling 737 MAX aircraft involved in two fatal crashes will impact U.S. economic growth and employment, but the pain may be brief and concentrated in areas where suppliers are located, analysts and executives say.
The biggest assembly-line halt in more than two decades at Boeing could cut first quarter 2020 gross domestic product growth by at least half a percentage point, economists estimated on Tuesday. The hit to GDP growth would come from a smaller inventory build.
Boeing holds unique sway in the U.S. economy as the largest U.S. goods exporter and also as the largest weight in the Dow Jones Industrial Average .DJI, the blue chip stock index tracked worldwide as a bellwether of wealth creation.
The suspension of production comes as the manufacturing sector is starting to regain its footing after being pressured by a 17-month trade war between the United States and China, which has eroded business sentiment and helped to undercut capital expenditure.
Since a global grounding of the Boeing 737 MAX in March that froze deliveries, the aircraft manufacturer continued production of the aircraft. The resulting surge in aircraft inventory offset the drag on GDP growth from reduced exports and business spending on equipment.
“With deliveries of the plane already halted, exports and investment in aircraft are unlikely to fall much further,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York. “But the decision to stop producing means that the surge in inventories will end, resulting in a big drag on economic
