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IPFS News Link • Economy - International

Global Economy Is Slowing


The U.S. economy is entering its 4th economic slowdown of this expansion, which has been relatively weak. To be clear, the economy isn't close to having two quarters of negative real GDP growth which is the baseline definition of a recession. Four slowdowns in one expansion is an unusually high number. The reason for this is because the expansion is 9 years old making, it the 2nd longest since 1854. It's reasonable to assert that the slowdowns would be close to recessions if during the strong periods of the expansion the economy was growing at the pace it grew at in the previous few decades.The CBO's estimate of 3.3% growth in 2018 is supported by the omnibus spending deal and the tax cuts. That level of growth is considered amazing, but it would be considered low growth in the post WWII period up until the turn of the century. Mentioning the CBO's estimate is important because most government forecasts are aggressive. The Fed expects 2.7% growth and inflation to meet its 2% target in the next few months which is why it is raising rates at a relatively quick pace for this cycle in 2018. With that said, this hike cycle has been the slowest since 1977.

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