Caution from the Fed? - ING
|"The US has had a great 2018 but will face more headwinds in 2019. Worryingly, there are already some signs of a slowdown coming through in the data, in particular, the housing market," notes ING Chief International Economist James Knightley.
Key quotes
"The US economy has performed really well this year with a robust jobs market and massive tax cuts helping to generate the strongest year of GDP growth since 2005. But maintaining this momentum in 2019 will be hard, given the headwinds of the lagged effects of the strong dollar and higher interest rates along with the fading support from the fiscal stimulus and intensifying trade protectionism at a time of softer global growth. Housing and investment numbers suggest that this slowdown may already be underway."
"We are certainly not suggesting the US is on the verge of a pronounced slowdown – we see GDP growth of 2.4% in 2019 and 1.8% in 2020, but some signs warrant caution on the US outlook. There are still positives for the US such as good momentum and robust wage growth, but looking at the situation all together it is understandable why Fed officials sound more mixed on the outlook."
"For now, we are forecasting a December rate rise with three more rate rises next year, but the balance of risks does appear to be shifting towards a more modest rate hike path making it look as though two rate hikes are more likely than four."
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