737 Max crisis could hit US GDP

Boeing's decision to temporarily halt production of the 737 Max aircraft is likely to disrupt the supply chain and could reduce the GDP of the United States by as much as half a percentage point this year, analysts said.

Most of the disruption will occur in the first quarter as parts suppliers cut or halt production and, in some cases, lay off workers as companies struggle to reduce costs. The supply chain is global, but will hit hardest the US companies that supply most of the parts and labor, Moody's Investors Service said in a research report on Monday.

However, the knock to the US economy may be softened by the phase one trade agreement between the US and China, expected to be signed on Wednesday in Washington. Nevertheless, US government officials said they are prepared for the worst.