According the CNBC and recent Fed surveys in March, the US economic growth is likely to slow down sharply in 2020 and 2021. The GDP growth projected for this year is just 2.3 percent, which is down from 2.44 percent from the January survey and in 2020, many people from the Fed are projecting the GDP to get below the 2 percent mark.
The Fed survey has further led the Fed to lower their expectations for the rate hikes this upcoming year and the next. Many of the people in the Fed are also projecting that their will be major rate cuts with very minimal hikes in the near future. When looking abroad, the basis points for was knocked about 40 points off of GDP forecasts this past year.
This article was very interesting as it dives deeper in the ways the Fed are looking at why they think that this might happen in the next two years. One of the reasons is the trade deal expectations, specifically with US-China deals, and tariffs that might be implemented. Another reason stated was because of the fewer Fed hikes that will happen these next two years, including the Fed saying there will be a 100% chance of no hike in March. It will be interesting to see what will happen with the GDP and the Fed within the next couple months and the next couple years.
Source: https://www.cnbc.com/2019/03/19/us-economic-growth-is-set-to-slow-sharply-this-year-and-next-according-to-cnbcs-fed-survey.html
3 comments:
Jack,
While it may be slightly worrisome to see a predicted slowdown of our economy, I am interested to see other prediction for other powerful nations (i.e. U.K., Germany, China, etc.) I have read a handful of articles that all eluded to a world economic slowdown, so perhaps we won't be in as bad as a position as some may think. Though, it is understandably difficult to continue growing at a high rate while we have been at the top for so long.
Historical GDP annual growth rates for the US already indicate we are on the downside of the cycle. Growth rates have remained around 2% since 2016, and the recent boost to 3% in 2018 is likely explained by increased short-run trade due to foretasted tariffs.
Interest rates are historically low if you look before the 2008 recession. The Federal Funds rate peaked close to 5% before the crash. I wonder how effective lowering interest rates will be for the Fed if they are trying to boost growth.
https://tradingeconomics.com/united-states/gdp-growth-annual
I agree, throughout powerful nations around the world, especially in Europe, the economies seem to be slowing down. The only thing I found interesting is the fact that many analysts think that the U.S economy is slowing down at a faster rate, which is something to keep an eye on in the near future.
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