US real GDP growth forecasts have been upgraded to 2.5-2.9% in 2018 and 2.3-2.9% in 2019. Fiscal stimulus is the key contributor to the faster growth. The strong economic conditions have also added to rising inflation, which is expected to moderately overshoot the Federal Reserve’s 2% target over 2018-2019. Financing conditions remain loose, despite the continuing tightening of monetary policy. Private sector confidence remains high, though it appears to have peaked
We have upgraded US GDP growth forecasts to 2.5-2.9% in 2018 and 2.3-2.9% in 2019. Fiscal stimulus is the key contributor to the faster growth over 2018-2019, adding 0.5-0.7% growth annually. This comes from a combination of tax cuts and increases in federal government spending in recent congressional bills.
The strong economic conditions have also contributed to rising inflation, which is expected to moderately overshoot the Federal Reserve’s 2% target over 2018-2019.
Financing conditions remain loose, despite the continuing tightening of monetary policy. Private sector confidence remains high, though it appears to have peaked.Beyond the short-term fiscal stimulus effects, we expect long-term factors such as workforce ageing and slower productivity growth to dominate after 2020, leading to annual GDP growth of 1.1-2.1% over 2021-2025.
Baseline forecast probability: 20-30% at a 1-year horizon.
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