U.S. economic expansion will continue over the near term, despite the increasing possibility of a recession. The economy grew by 3.1 per cent in the first quarter of this year; much weaker growth in the 2.0 per cent range in the second quarter is expected. The plus-3.0 per cent gain in the first quarter of 2019 is mainly attributed to special circumstances involving the trade dispute between China and the United States.
“In June, the U.S. economic expansion, which started toward the end of 2009, reached the 10-year mark and, barring a major shock to the global economy, will soon become the country’s longest on record” says Kip Beckman, Principal Economist. “The previous record occurred during the 1990s, when the high technology and communications revolution fueled a long economic expansion that came to an abrupt end when shares in many of these companies were overvalued and collapsed—a development that sank the U.S. economy into recession.”
Findings from U.S. Outlook Economic Forecast Report:
· The U.S. economy will grow by 2.6 per cent this year and 2.1 per cent in 2020.
· Trade tensions between the U.S. and China will continue to restrain economic growth.
· Fiscal deficits in the $1-trillion range will continue through the medium term.
· Inventory accumulation surged in the first quarter of 2019 to well over $100 billion and should drop back to more normal levels for the remainder of this year.
· Overall, we expect the U.S. economy to expand by 2.6 per cent this year and 2.1 per cent in 2020.
· If the economy experiences a severe downturn, there will be little room for additional fiscal stimulus. This would leave monetary policy as the main lever for fighting an economic downturn.
