US economy seen losing some of its strength in coming quarters – Reuters poll

The latest Reuters poll of over 100 economists, the following are the expectations for the US economy ahead of Friday Q2 GDP report.

The economy will lose some of its upbeat momentum in the coming quarters.

The economists gave just a one-in-three chance of a recession over the next two years.

“The July 18-23 poll of over 100 forecasters showed the US economy, set to hit a growth rate of 4.1 percent in the quarter just ended, will lose some of its shine with growth easing each quarter, slipping to about half that rate in the final three months of 2019.”

Michael Moran, the chief economist at Daiwa Capital Markets, noted: “The upcoming GDP report (for Q2) is likely to be impressive, but we do not expect similar results in coming quarters. Some of the engines that fuelled activity in the trade sector are likely to be temporary. We suspect that hindsight will show Q2 to be a spurt in growth rather than the beginning of a firmer trajectory.”

In the coming quarters, import tariffs, increasing concerns of further retaliation from global trading partners ad Fed interest rate hikes are likely to weigh on the economic growth.

While the Fed is seen keeping rates on hold at its July 31^st– Aug 1, “the central bank was expected to hike by 25 basis points in September and once more before the end of this year, taking the fed funds rate to 2.25-2.50 percent.”