Economic Outlook

US Economic Outlook

We have revised up our growth projections due to the unexpected and significant late-cycle fiscal boost in form of the recent federal budget agreement. We now expect real GDP growth of 2.9% in (calendar) 2018, and 2.2% in 2019. Since the output gap is estimated to have closed in 3Q17, and the economy is at full employment, this additional stimulus following on the heels of the tax cut late last year is also intensifying inflation risks on the margin. We expect the Federal Reserve to hike interest rates four times in 2018 to remove monetary stimulus.