2018 U.S. and global growth forecasts have been upgraded. The April Outlook Assessment evaluates U.S. and global 2018 forecasts made at the beginning of the year. Above potential economic growth continues to be a global theme as global and world economies are benefiting from years of easy monetary policy. Momentum is powerful and is self-reinforcing. Practically all economies are growing above potential and slack has already disappeared or is disappearing rapidly. However, recent U.S. and global data have been a bit softer than expected, which might mean that acceleration in momentum is waning
Synopsis – April Longbrake Letter
In this month’s letter, Bill Longbrake reviews his approach to forecasting economic outcomes for the U.S. and incorporates data and forecasts from the Congressional Budget Office’s April 10-year federal budget revision. Enormous fiscal stimulus embedded in the “Tax Cuts and Jobs Act,” disaster relief spending, and substantial increases in defense and discretionary spending caps have dramatically changed the near-term outlook and will lift U.S. growth substantially above potential in both 2018 and 2019. Bill cautions readers to enjoy the good times now because experience tells us that massive stimulus, when the economy is already operating at or above full capacity, eventually leads to recession and correction of the imbalances that built up during the euphoric period of strong growth. He suggests that prudent risk management mandates preparation for possible recession in 2020.