U.S Macro Outlook Q1 2019

by James Lane | Aug 29, 2019

The U.S. economy kicked off 2019 on a strong note, registering robust growth in Q1 despite dampened January growth due to the partial government shutdown and stock market correction. A build-up in private inventories and a sharp drop-off in imports were largely responsible for growth beating expectations. Consumer spending is expected to provide support to GDP growth in Q2, but whether it does beyond Q2 will depend on how the U.S.-China trade situation plays out.

Unemployment remains at its lowest rate in nearly two generations. The fiscal stimulus will continue to benefit consumers, but with the economy at or near full employment, job growth will likely moderate in 2019.

Given the persistent business uncertainty, slower global growth, lagged effects of tighter monetary policy, and ongoing trade tensions, our growth forecast for the U.S. for 2019 remains unchanged from last quarter. Growth will be more moderate this year than it was last year, but still reasonable. We continue to expect an economic slowdown to begin by H2 2020, in reaction to higher interest rates, equity market corrections, credit market problems and international geo-political factors. The slowdown will be relatively mild and quick.
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