January 28, 2020

US outlook: a soft landing supported by the Fed

Share on facebook
Share on twitter
Share on linkedin
Share on email

In Short

Fears of a US recession have abated, but we still expect growth to ease from 2.2% to 1.6% in 2020.
US outlook: a soft landing supported by the Fed
Share on facebook
Share on twitter
Share on linkedin
Share on email

Highlights:

  • Fears of a US recession have abated, but we still expect growth to ease from 2.2% to 1.6% in 2020. The end of the fiscal stimulus and headwinds to capex from existing tariffs and lower profitability will be the main drag.
  • Growth will be increasingly reliant on consumption, supported by the labor market and subdued inflation. Interest rate-sensitive components of demand, especially housing, will enjoy the boost from lower interest rates.
  • Politics remains the biggest risk factor. The choice of who will oppose Trump in the November election could become another big source of uncertainty from Q2 on. The trade truce with China has reduced tail risks, but a quick and meaningful rollback of existing tariffs appears unlikely.
  • The dovish turn taken by the Fed has been instrumental in delivering a soft landing. Our outlook of relatively weak growth in the first part of the year makes another, final, rate cut in Q2 more likely than not. The announced policy changes and especially a likely move towards an average inflation targeting will give a dovish tilt to the stance.

Read the full publication below.

US OUTLOOK: A SOFT LANDING SUPPORTED
BY THE FED

Also interesting

size 3
July 29, 2021
Market Commentary

COVID-19 UPDATE Facts & Figures – 29/07/2021

federal-reserve-building-with-twenty-dollar-bill-on-grunge-texture-picture-id175716236
July 28, 2021
Market Commentary

MARKET COMMENTARY – The Fed: the recovery is on track, tapering is approaching

EU flag green
July 26, 2021
Focal Point

ECB greening of the credit market to start in 2022