Analysts at ING explained that they have been more upbeat on the US than consensus for quite some time and currently predict 2018 growth of 3%.
Key Quotes:
“We see no reason to change that, nor our call for three further Federal Reserve interest rate hikes this year, but the path of consumer spending is critical. Here we still feel consumer confidence surveys have value.”
“Of course, while we are more aggressive than the market, no one is really expecting up to ten US rate hikes! Debt levels are high and the economy is late cycle meaning that the transmission between rate increases and slower growth could happen quickly.”
“In any case, there are already clear supply bottlenecks in the US economy that make achieving 6% growth nigh on impossible – for example, where is the labour to do the work going to come from? As such, ongoing “gradual” hikes remain our base case with the Fed funds rate hitting 3% next year.”
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