Content area
Full text
PARTICIPANTS | Conf. 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 U.S. economy remains on a steady and gradual growth trajectory, and appears to be decoupling from Washington's politics. The combination of steady job growth and low inflation are contributing to the strength of the equity market. The Fed is conducting itself predictably with a data-based gradual and cautious interest rate normalization strategy. Both the business community and consumers have lost their taste for bubbles, preferring stability and predictability in their decision-making. 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. For the time being, the looming uncertainty about the timing and scope of tax reform and infrastructure spending has been filtered out across the board. 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. The numbing political and legal quagmire in Washington is nudging state and local governments to map their own course of economic policies ranging from tax and investment incentive policies to green technology and labor force development.
Consensus puts growth in GDP at 1.63 percent by the second quarter of 2018, significantly below the assertion made by the administration of more impressive growth. Rajeev Dhawan of Georgia State University is among optimists with forecasts of 2.2 and 2.9 percent GDP growth in 2018 and 2019, respectively. Persistent missing of the inflation target by the Fed...