US Economic Growth Forecast

US Economic Growth Forecast

US Economic Growth Forecast

The WS-J’s monthly survey of private economists see now the average estimate for US economic growth this year to have increased to 3R, up from projections of 2.9% last month and 2.4% a year ago.

The survey of private economists also expects the unemployment rate falling to 3.6% by June 2019, which would be the lowest unemployment rate in nearly 50 years. The jobless rate in July was 3.9%.

The average forecast for growth in Y2019 was 2.4%, little changed in recent months. By Y 2020, the average forecaster projects economic growth will slow to 1.8%, which is down from 2% earlier this year.

The Fed, the Congressional Budget Office (CBO) and the International Monetary Fund (IMF) all project a slowdown from the growth rate of Y 2018. The Fed sees 2% growth in Y 2020 and 1.8% growth in the long run.

US wholesale inflation (PPI) pressures were subdued in July, with producer prices for final demand remaining unchanged after advancing 0.3% in June and 0.5% in May. On a yearly basis, producer prices grew 3.3% and the core index rose 2.7%

The most significant piece of US data in what has been so far an uneventful week comes today with the US Consumer Price Index (CPI), which is forecast to rise 3.0% Y-Y in July, up from 2.9% in June.

It will be interesting to see if the annual CPI rate hits the 3.0%, because that would be the highest rate since December 2011.

Serious concerns have emerged that Turkey’s economic problems could spill over into the Euroarea. The EUR sank to $1.144, while USD advanced alongside Treasuries.

The Stoxx Europe 600 Index, which is a stock index of European stocks that has a fixed number of 600 components representing large, mid and small capitalization companies slid, was dragged down by banks and miners, after a news report said the European Central Bank (ECB) was concerned about the exposure of European lenders to Turkey following the Turkish lira’s dramatic plunge of nearly 12 per cent against the dollar, the Financial Times (FT) reported. The currency fell to an all-time low beyond 6 Turkish lira of 6.0588 TRY per dollar this morning.

The fall came amid increased concerns from the Single Supervisory Mechanism, which is the ECB’s banking watchdog, about the exposure of some of the biggest lenders to Turkey that are chiefly the banks “BBVA, UniCredit and BNP Paribas.”

The ECB’s Single Supervisory Mechanism has also begun over the past couple of months to look more closely at European banks’ ties to Turkey, adding that the watchdog doesn’t see the situation as critical yet.

Nevertheless, the very serious risk is that Turkish borrowers may not be hedged against the Turkish lira’s weakness and could start to default on foreign-currency loans, the Financial Times said.

BBVA, UniCredit and BNP Paribas as well as the ECB all declined to comment on the central bank’s concerns.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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