The International Monetary Fund said on Tuesday it had cut its growth forecasts for the US economy to 2.1% in 2017 and 2018, dropping its assumption that the Trump administration’s tax cut and fiscal spending plans would boost growth.
In a statement following a review of US economic policies, the IMF said the Trump administration’s push for annual growth of over 3% for a sustained period was unlikely to be achieved partly because the labor market is already at a level consistent with full employment.
The IMF in April had forecast US growth of 2.3% for 2017 and 2.5% for 2018, based partly on gains from expected tax cuts and new federal spending. But given the lack of details on the US administration’s “still evolving policy plans” the IMF said it had decided to remove the assumed stimulus from its forecasts.
The IMF said the Trump administration’s latest budget plans would place a disproportionate share of spending cuts on to low- and middle-income households, adding: “This would appear counter to the budget’s goals of promoting safety and prosperity for all Americans.”
Instead, the fund suggested a tax policy that would improve the federal revenue-to-GDP ratio, more balanced cuts that would strengthen the social safety net’s efficiency, and efforts to contain healthcare cost inflation.
Ahh....Good Times......In the Worlds Biggest Economy....
Ahh....Good Times......In the Worlds Biggest Economy....
Simon pretty much everyone here has worked out that the Trump boost to the USA economy wasn't going to happen, we don't need your cut and paste to tell us what we already know.
Credit creation in the USA has fallen in all categories. The USA will have to start cutting interest rates in about 12 months.
Ahh.... The good times.
Take risks - if you win you will become wealthy, if you lose you will become wise
Simon pretty much everyone here has worked out that the Trump boost to the USA economy wasn't going to happen, we don't need your cut and paste to tell us what we already know.
Credit creation in the USA has fallen in all categories. The USA will have to start cutting interest rates in about 12 months.
Ahh.... The good times.
Ya can't expects poor ole Simons ta be thinking 'long' term like 12 months tho Rufus surely?
Like sheesh he is just a day trader in currencies ...
A Professional Demographer to an amateur demographer:"negative natural increase will never outweigh the positive net migration"
That means the economy is currently slowing and the Fed will have to take action. It doesn't mean the economy is headed for a recession.
How will lower rates affect your plans? That's what you need to work out.
herbie
28 Jun 2017, 10:06 AM
Ya can't expects poor ole Simons ta be thinking 'long' term like 12 months tho Rufus surely?
Like sheesh he is just a day trader in currencies ...
Lol - Simon thinks he is a trader, but I don't think he is in the true sense. More like he plays in the market a bit. If that's what he wants to do then fair enough.
Traders need volatility, so they look for both good news as well as bad news. Simon is only concerned with bad news, which tends to make me think he's not approaching his task in a professional manner.
That means the economy is currently slowing and the Fed will have to take action. It doesn't mean the economy is headed for a recession.
How will lower rates affect your plans? That's what you need to work out.
While this may be the case, lets look at why this is. Credit expansion was taken to its limits at 6% fed rates back in 2008. Because it was at its limits there, being 6%, it started to collapse. In order to both stop collapse and also to create growth, we were forced to stoop to new levels, this was done by dropping rates 6% overnight. These new measures have done exactly what they had hoped, and that was to stave off collapse then, and to maintain growth.
While this has been achieved since 2008, where exactly has it left us now? It has sort of put us back at square one, but instead of reach the limits of debt explansion at 6 %, we are now at the point we have now reached them at zero, or at current fed rates being 1%.
If we consider this, and that the fed only has 1% to play with, how much more debt expansion can we expect from this 1% if they are to drop them. And what when they are at zero and things are still declining ?
If price falls and stagnation set in at zero, lenders seeing this risk are not going to lend out their money for such little return and so much risk. Its like if they know prices are going to fall, they would rather just hold their money rather than risk it for so little return. And this is most likely the point that any body able to loan money will want a higher return in order to loan out their money at the current levels of risk.
It has all worked thus far, but those zero rates for so long.....have now taken debt expansion to its limits at 1%,just as they were at 6% back in 2008.
I ask the question, what when we are at 0%, and like now at 1%, things are declining ?
Would you loan out your money at 1% on something that looks like it will just go down ?
Or get zero interest in the bank or even slightly negative, so not much difference at all really to not risk lending it to somebody and seeing declines or losses. Is lending out your money for a 0.5% increase over bank rates worth the risk ? What about when things start looking a bit worse than now ?
If the US stock market was now to start collapsing at the emense levels near zero rates have now taken it, will now dropping rates 1% overnight to zero have the same effect that dropping it 6% overnight at the much lower levels it was back then in 2008 ?
These are some of the questions people should ask themselves. And feel free to share any thoughts or opinions on this.
Simon pretty much everyone here has worked out that the Trump boost to the USA economy wasn't going to happen, we don't need your cut and paste to tell us what we already know.
Credit creation in the USA has fallen in all categories. The USA will have to start cutting interest rates in about 12 months.
Ahh.... The good times.
I’m still in the “muddle through” camp. No boom. No Bust. And long bond yields to remain lower for longer. This call has been consistently correct for the past 5 years. The biggest risk is a correction in the over-inflated sharemarket.
From a GDP perspective, demographics will begin to help by 2019-2020 as the echo-boomers enter their prime age for work (the population spike at the 24-26 age cohort below). That is the best chance to achieve sustainable +3% growth Trump & co are trying to achieve.
I’m still in the “muddle through” camp. No boom. No Bust. And long bond yields to remain lower for longer. This call has been consistently correct for the past 5 years. The biggest risk is a correction in the over-inflated sharemarket.
From a GDP perspective, demographics will begin to help by 2019-2020 as the echo-boomers enter their prime age for work (the population spike at the 24-26 age cohort below). That is the best chance to achieve sustainable +3% growth Trump & co are trying to achieve.
Yes that is very possible, but I think it will become increasingly hard for the Fed to justify rate hikes in the future until higher growth is evident.
BTW it seems that we have our own echo boomers, and that will affect the housing market over the next 5 or 6 years or so.
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