U.S. Economy: Growing Signs of Decoupling from Washington

Abstract

Board = Conference Board, New York, New York; Fannie Mae = Fannie Mae, Washington, D.C.; IHS Markit = IHS Global Insight, Lexington, MA; GSU - EFC = Georgia State University, Economic Forecasting Center, Atlanta, Georgia; Moody's Economy = Moody's Economy. com, Westchester, Pennsylvania; Mortgage = Mortgage Bankers Association, Washington, D.C.; NAM = National Association of Manufacturers, Washington, D.C.; Perryman Gp = The Perryman Group, Waco, Texas; Royal Bank of Canada, Toronto, Ontario, Canada; S&P = Standard & Poor's, New York, New York; US Bank = U.S. Bank, Minneapolis, Minnesota; US Chamber = U.S. Chamber of Commerce, Washington, D.C.; Wells Fargo = Wells Fargo Bank, San Francisco, California. The crash of 2007-2008 has contributed to the maturity of consumers and, with the exception of home prices, the business community is being responsive by avoiding erratic price changes despite the strong job market. The question is whether the economy can handle further growth in aggregate demand while there is an upper cap on economic expansion placed by supplyside factors, such as sluggish productivity, stubbornly low labor force participation, and tightening migrant labor market. Persistent missing of the inflation target by the Fed is pointing to limits of the monetary policy to impact economic activities that begs fiscal policy options controlled by Congress and the White House to run a hotter economy.