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US Economic Outlook for 2018 Winston Rowe & Associates
The U.S. economic outlook is healthy according to the key economic indicators.
By: Winston Rowe & Associates
President Trump promised to increase economic growth to 4 percent. That's faster than is healthy. Growth at that pace leads to an overconfident irrational exuberance. That creates a boom that leads to a damaging bust. The factors that cause these changes in the business cycle are supply, demand, capital availability, and the market's perception of the economic future.
U.S. GDP growth will rise to 2.7 percent in 2018, 2.4 percent in 2019, and 2 percent in 2020. That's according to the most recent forecast released at the Federal Open Market Committee meeting on March 20, 2018. This estimate takes into account Trump's economic policies.
The unemployment rate will drop to 3.8 percent in 2018, 3.6 percent in 2019, and 3.6 percent in 2020. That's better than the Fed's 6.7 percent target.
Inflation will be 1.9 percent in 2018, 2 percent in 2019, and 2.1 percent in 2020. The core inflation rate strips out those volatile gas and food prices. The Fed prefers to use that rate when setting monetary policy. The core inflation rate will be 1.9 percent in 2018, 2.1 percent in 2019 and 2020. It's unusual that the core rate is that similar to the regular inflation rate. Fortunately, the core rate is close to the Fed's 2 percent target inflation rate. That gives the Fed room to raise rates to a more normal level. The U.S. inflation rate history and forecast provides a good basis for predicting the coming years' inflation levels.
U.S. manufacturing is forecast to increase faster than the general economy. Production will grow 2.8 percent in 2018. Growth will slow to 2.6 percent in 2019 and 2 percent in 2020. Those forecasts have not yet taken into account President Trump's promises to create more jobs.
The Fed began reducing its $4 trillion in Treasury's in October 2017. It initially said it would do so only after the fed funds rate has normalized to 2 percent. The Fed acquired these securities during quantitative easing, which ended in 2014. That's helping to raise the yield on the 10-year Treasury note. This will drive up long-term interest rates, such as those on fixed-rate mortgages and corporate bonds.
The next most substantial increase, 2.1 million jobs, will occur in professional and technical occupations. Most of this is in computer systems design, especially mobile technologies and management, scientific, and technical consulting. Businesses will need advice on planning and logistics; implementing new technologies;
2018 will be a prosperous year as we continue to say goodbye to the effects of the financial crisis. Be on the lookout for irrational exuberance in the stock market. That signals the peak of the business cycle. Another recession is probably two to three years out. It all depends on whether President Trump's tax cuts will create the jobs he promised.
Therefore, the best thing to do is to stay relentlessly focused on your financial well-being. Continue to improve your skills and chart a clear course for your career. If you've invested in the stock market, be calm during any pull-back. Plummeting commodity prices, including gold, oil, and coffee, will return to the mean. All in all, an excellent time to reduce debt, build up your savings, and increase your wealth.
This article was published by Winston Rowe & Associates you can visit them online at http://www.winstonrowe.com