United States (US) Economic Forecasts
Medium- and Long-term Forecast
- S&P Global forecasts 2.0% GDP growth in 2019, followed by 2.1% growth in 2020 (fourth quarter over fourth quarter). Thereafter, a period of below-trend growth is assumed, balancing the risks between continued trend-like growth and a recession.
- The Fed is now expected to implement one more federal funds rate hike and wind down its balance-sheet run-off, bringing the top of the funds range to 2.75%, near the longer-run nominal neutral rate.
- The unemployment rate is forecast to decline to 3.5% by the second half of 2019 and core personal consumption expenditure inflation to rise to 2.2% by fourth quarter 2019.
- We view the recent drop in broad equity markets as only partly related to fundamentals and look for an 18.5% gain in the S&P 500 this year (end-2019 over end-2018).
Country Risk Rating for the United States
- In mid-term elections held in November 2018, Democrats took a majority in the House of Representatives, while Republicans extended their majority in the Senate. Given the congressional composition, the likelihood of policy gridlock will almost certainly increase.
- Although organized attack risks remain, radicalized Islamist and domestic groups and individuals pose a more imminent threat. Issue-driven protests, including around immigration, gun control, or reproductive rights, are common, with an increasing likelihood of demonstrations by individuals associated with right-wing extremist organizations.
- We forecast 2.0% GDP growth (fourth quarter over fourth quarter) followed by 2.1% growth next year. After 2020, we assume a period of below-trend growth, balancing the risks between continued trend-like growth and a recession.
- Long-term interest rates are 10 to 20 basis points lower, reflecting a recent update to our “Fed call”, with just one more rate hike penciled in for December.
A note on our risk ratings: S&P Global derives country risk ratings for 206 countries, based on six separate ratings in each country: Political, economic, legal, tax, operational and security with 22 detailed sub-aggregate risks. These ratings allow you to quantify risk with greater specificity with a scoring system based on a 0.1-10 logarithmic scale. Seven risk bands, from low to extreme, allow you to compare and contrast risk between countries and regions.
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