Global Chiefs Predict U.S. Economy For 2018
The U.S. economy is in a unique position in 2018. After a strong recovery from the 2008 financial crisis, American voters chose to do a dramatic 180 degree turn in the 2016 election, opting for a conservative government across all three branches.
The ramifications of this are just starting to be understood. Coupled with natural economic trends, a rising China and potential rebukes of longstanding trade agreements, this could mean either a volatile future for the American economy or a continued upward trend. Compiled here are some predictions from global chiefs about what the future holds for the most powerful nation in the world.
Following a significant meeting at the International Monetary Fund (IMF) and World Bank, there was an upbeat, if cautious, mood. The IMF recently bumped up its forecast for global economic growth in 2018 based on surging stocks, tight credit spreads and a non-volatile market.
While there was a call for optimism and excitement, global economic chiefs including Federal Reserve Chair Janet Yellen called for temperance as the U.S. faces looming inflation following expansion. Inflation could spell trouble if U.S. wages, which have been the key slow-grower since the 2008 recession, don’t increase in kind.
Economic overconfidence is the greatest threat at this high-reaching juncture. Scarred by the impact of the Great Recession, many economic leaders warn that overexcitement could lead to another major economic step back, in spite of increasing interest rates and strong growth.
The upcoming days of plenty could be held back by politics themselves. With a potential breakdown between Canada, Mexico and the United States over the terms of NAFTA, long a pet peeve of President Trump; continued insecurity over the impact of Brexit; JPMorgan Chase and Goldman Sachs preparing for worst case scenarios; the potential secession of the economic powerhouse of Catalonia from Spain; threats of continued instability in the Middle East; and a destabilized North Korea, the world’s future is certainly filled with uncertainty that could send drastic economic ripples to the United States.
Internally, the United States may see a reversal of trends with the policies being implemented by the Trump administration. With extensive tax cuts, heightened spending and a reversal of financial regulations implemented by the Obama administration after the 2008 crisis planned, experts foresee a reversal of a 35-year trend of disinflation. President Trump’s selection for Federal Reserve Chair, Jerome H. Powell, was confirmed by the Senate on Tuesday with bipartisan support. He will replace his predecessor Janet Yellen on Feb. 3.
Because of the potential for global volatility, hopes for an economic “Trump Bump” have waned somewhat. Though the IMF remained confident about global growth in 2018, it downgraded its forecasts for both the United States and the United Kingdom.