Wall Street Banks See US Economy Growing to 4%, Not Collapsing
$GS, $MS, $DB, $BAC, $HSBC, $JPM
- US Economy Continues to Boom under President Trump
The International Monetary Fund (IMF) conducts its semi-annual health check of the world economy this week with investors worried that global growth is starting to fade after accelerating the most since Y 2011 last year.
Despite the soft start to the year and ongoing trade tensions, economists on Wall Street are sticking to forecasts for another solid economic expansion in Y 2018 while acknowledging the risks of slippage have mounted.
Below is a rundown of what some economists at major banks are saying in reports and interviews about the outlook.
The forecasts are for global output in Y 2018 and are mostly in terms of purchasing power parity, the metric favored by the IMF which currently anticipates an expansion of 3.9%.
Goldman Sachs Group Inc. (4.1%)
There have been negative surprises, but we’re not that overly concerned. The bottom line is that the global growth numbers have moderated, but we’re not rolling over as much as some of the data suggest.
–Jari Stehn, Economist, 3 April
Morgan Stanley (3.9%)
Developed market growth has moderated alongside the rising risk of protectionism, renewing concerns over the length of the global expansion. The more critical debate, in my view, is how long the business cycle has to run. The end does not seem near.
The most important risk to the business cycle in our view is the potential stress in U.S. corporate balance sheets, particularly in the context of a further rise in real rates. Hence, we recommend that you keep your seat belts fastened. –Chetan Ahya, global co-Head of Economics, 8 April
HSBC Holdings Plc (3.9%)
The global synchronized recovery looks set to continue in Y 2018. Global growth is very robust by post-crisis standards, all regions of the world are participating in a synchronized upturn and unemployment is falling more or less everywhere.
The deflation risk has been averted but inflation is generally very contained and interest rates are still low.
Y2018 should be another solid year of growth in the global economy. Although we think that growth has already peaked in the euro area and Japan, we expect much of emerging markets to actually pick up marginally.–Janet Henry, global Chief Economist, 22 March
JPMorgan Chase & Co. (3.9%)
While surprised by recent news we remain comfortable that 2018 will produce strong and synchronized global growth. However, for the first time in a year, activity and survey readings are challenging our forecast.–Bruce Kasman, chief Economist, 13 April.
Barclays Plc (4.2%)
Escalation of the US-China dispute has entered a new phase, but ongoing trade war uncertainty leads us to recommend shifting away from risk assets. Recent declines in global manufacturing confidence and a moderation in US job gains raise risks to our growth view. But sentiment is still at historically healthy levels, US earnings are strong, and China growth has accelerated, keeping the global expansion intact in Q-2.– 6 April report
Bank of America Merrill Lynch (4.0%)
It’s still a synchronized improvement, though we may have hit the maximum pace. The US will move into the lead because of the big fiscal stimulus. Growth will be a little softer in Europe and Japan. –Ethan Harris, head of global economics research, April 9.
Deutsche Bank AG (3.9%)
Growth is slowing from a relatively high level. We’re worrying much more about overheating than a slowdown. The big tailwind for global growth will continue to be the fiscal expansion in the US.
–Torsten Slok, chief international economist, 9 April.
Have a terrific week.
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