White House top economic adviser Larry Kudlow predicts that economic growth will surpass at least 3% this year.
“I’m looking for faster growth: I think we’re going to get 3% this year,” Kudlow told CNBC. “The trade deals will help, the Fed changed policy — that was very, very important,” the veteran financial guru and former Ronald Reagan adviser said.
Meanwhile, economists surveyed by Bloomberg News this month forecast growth this year of 1.8%, down from an estimated 2.3% in 2019. They put the chances of a recession happening over the next 12 months at 30%.
The Atlanta Fed is forecasting GDP increasing at a 1.8% annualized rate in the fourth quarter. The economy grew at a 2.1% pace in the third quarter. The New York Fed Staff Nowcast stands at 1.2% for the fourth quarter and 1.7% for 2020's first quarter.
“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” said Kudlow, National Economic Council director.
“You’ve gone from 1.5% to 2% growth. We had it going at almost 4%, then the Fed tightened," said Kudlow, who served as the Trump campaign's senior economic adviser.
"We’re now down to 2.5% to 3%,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
However, not everyone is so optimistic about the U.S. economy.
Treasury Secretary Steven Mnuchin has warned that troubles at aircraft maker Boeing Co. (BA) could trim about half a point from U.S. GDP in 2020 but economic growth should still come in at about 2.5%.
His assessment was more upbeat than many economists, who expect slowing growth. They say the economy had received a boost from the 2017 Republican tax cuts and from increased government spending, but that stimulus is starting to fade.
Meanwhile, Pacific Investment Management Co. has warned that U.S. growth is likely to slow in the first half even as the likelihood of recession recedes globally amid reduced trade tensions with China and further accommodation by central banks, Bloomberg reported.
“Just as the U.S. cycle lagged behind the global cycle during 2018 and 2019 with the U.S. economy slowing later and by less than the rest of the world, we expect global growth to trough out and rebound earlier than U.S. growth this year,” Joachim Fels, global economic adviser, and Andrew Balls, chief investment officer for fixed income, wrote in an outlook earlier this month.
Pimco warned investors to expect real U.S. gross domestic product growth to slow to 1.5%-2% in 2020, from about 2.3% in 2019, with most of the gains coming in the second half. Political uncertainty surrounding the U.S. elections could hold back “animal spirits” if progressive high-tax, high-regulation Democrats seize momentum.
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