By Dr. Sonu Varghese via Iris.xyz
The International Monetary Fund (IMF) just came out with a report downgrading U.S. growth forecasts, to 2.1% in 2017 (down from 2.3%) and 2.1% in 2018 (down from 2.5%).
Their updated outlook for the U.S. economy assumes that the Trump administration will not be able to get any of its fiscal policies off the ground – plans for tax reform, infrastructure spending, regulatory easing, and the administration’s budget to reprioritize spending and cut the debt and deficit are all left wanting for details, not to mention the fact that divisions in Congress have stalled any progress. Hence, growth is expected to continue along recent trend.
This dovetails with what we wrote in a previous post on the “Trump trade”. Falling long-term yields in the bond market suggest that the market believes economic growth is going to continue along its recent trend (about 2% annually), with lackluster inflation and wage growth.
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