Trade Disputes Poses Little Danger to the Thriving US Economy
Goldman Sachs declares President Donald Trump’s economy is growing at a pace of 3.5%, or 2X its estimated potential.
Goldman chief economist said the trade war poses little danger to the thriving economy
He predicts the Fed will hike interest rates 6 more times through the end of Y 2019.
But, there are various obstacles that could change the Fed’s plans, but said that he is “comfortable” with the current forecast, which he said might even be conservative.
“Although it is certainly possible that trade policy and emerging market spillbacks will result in a shallower path, on net we think the risks are tilted to the upside of our baseline forecast given the impressive growth momentum, the upward trends in wage and price inflation, and the very limited impact of the hikes on financial conditions so far,” he wrote.
Citigroup economists warn that slowing growth in Ys 2019 and 2020 pose a substantial danger to markets.
“We would characterize global growth as riding on the back of fading tailwinds, while facing increasingly strong headwinds. This raises the risk of an inflexion point some time in 2019 or early 2020,” a Citigroup economist said in a note. “We fear that the investment backdrop is becoming more likely to support extended down-trades.”
As a comparison, the most recent Atlanta Federal Reserve’s GDPNow forecast model showed the US economy is growing at a 4.4% annualized rate in Q-3.
The next GDPNow update is Tuesday, 11 September.
The US economy expanded in Q-2 at a slightly faster pace than previously estimated on revisions to imports and software spending, bolstering the strongest period of growth since Y 2014, according to Commerce Department data released last month.
For his part, President Trump has taken to Twitter to laud his economic accomplishments.
“Trump has set Economic Growth on fire. During his time in office, the economy has achieved feats most experts thought impossible. GDP is growing at a 3 percent-plus rate. The unemployment rate is near a 50 year low.” CNBC…Also, the Stock Market is up almost 50% since Election!” he Tweeted Sunday.
Trump followed that tweet up on Monday with another message.
“The Economy is soooo good, perhaps the best in our country’s history (remember, it’s the economy stupid!), that the Democrats are flailing & lying like CRAZY! Phony books, articles and T.V. “hits” like no other pol has had to endure-and they are losing big. Very dishonest people!” the President Tweeted.
Keeping America Great!
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