|

US real GDP growth has fallen to 2.2%

Developments since our August Monthly Economic Outlook

Our forecast for 2019 U.S. real GDP growth has fallen to 2.2%. The U.S. economy is showing clear signs of slowing, and while we believe economic growth is still far from entering negative territory, we only anticipate growth of about 1.5% over the next couple quarters. The consumer remains the key source of strength amid continued weakness in business fixed investment.

Our forecast for the fed funds rate has changed. In addition to the 25 bps cut we already had penciled in for September, we have added two more 25 bps cuts, in Q4-2019 and Q1-2020. The Fed seems intent on taking action to forestall a recession and return inflation to 2%, and as such we anticipate more easing in the absence of a major breakthrough on U.S.-China trade relations. Our 2019 year-end forecast for the 10-year Treasury yield is now 1.70%. For 2020, our year-end forecast is 2.05%.

Our initial forecast for 2021 sees real GDP growth in the United States of 2.0%, a fed funds rate that remains unchanged at 1.25%-1.50% and global real GDP growth of 3.2%. More complete 2021 forecasts can be found on slide 11.

Download The Full Monthly Macro Manual

Author

More from Wells Fargo Research Team
Share:

Editor's Picks

EUR/USD off highs, back to around 1.1900

EUR/USD keeps its strong bid bias in place despite recedeing to the 1.1900 zone following earlier peaks north of 1.1900 the figure on Monday. The US Dollar remains under pressure, as traders stay on the sidelines ahead of Wednesday’s key January jobs report, leaving the pair room to extend its upward trend for now.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure 

Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.