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Warning from the Fed? – ING

“The US has had an important 2018 however will face extra headwinds in 2019. Worryingly, there are already some indicators of a slowdown coming by means of within the knowledge, specifically, the housing market,” notes ING Chief Worldwide Economist James Knightley.

Key quotes

“The US financial system has carried out very well this yr with a sturdy jobs market and big tax cuts serving to to generate the strongest yr of GDP progress since 2005. However sustaining this momentum in 2019 shall be arduous, given the headwinds of the lagged results of the sturdy greenback and better rates of interest together with the fading assist from the fiscal stimulus and intensifying commerce protectionism at a time of softer international progress. Housing and funding numbers recommend that this slowdown might already be underway.”

“We’re definitely not suggesting the US is on the verge of a pronounced slowdown – we see GDP progress of two.four% in 2019 and 1.eight% in 2020, however some indicators warrant warning on the US outlook. There are nonetheless positives for the US such pretty much as good momentum and sturdy wage progress, however wanting on the scenario all collectively it’s comprehensible why Fed officers sound extra combined on the outlook.”

“For now, we’re forecasting a December charge rise with three extra charge rises subsequent yr, however the stability of dangers does seem like shifting in the direction of a extra modest charge hike path making it look as if two charge hikes are extra seemingly than 4.”

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