Macro Manual – Annual Edition

Our forecast for 2019 U.S. real GDP growth is 2.7%. If realized, this would mark a slowdown from 2018’s approximate pace of 2.9%, but it would still be faster than the average for this expansion and most estimates of potential growth.
Our fed funds forecast is two hikes in 2019, occurring in Q1 and Q3. Slower but still solid growth should prompt the Fed to keep hiking next year, but at a slower pace than occurred in 2018.
On the international front, we also expect slower economic growth, but not so slow that it derails most developed countries’ plans to continue gradually normalizing monetary policy. We look for rate hikes from the Bank of Canada, the European Central Bank, the Bank of England and even some modest tweaks to policy by the Bank of Japan.
The outlook for global trade policy is perhaps the key risk in 2019, with China being probably the biggest “swing” factor for global growth. We expect the Chinese economy to decelerate in 2019 for both structural and trade-related reasons.

Wells Fargo Research Team Wells Fargo

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