What factors affect the US economic growth rate
The effects of global processes on the world market are reflected in the domestic situation of most countries. Experts predict that economic growth rates in the USA will slow down and this trend will be observed over the next 2 years. The main reasons are tariff increases and strained relations with China.
According to the forecast, the average GDP will grow by 2.3% this year. At the same time, the data published in January showed 2.44%. By 2020, the indicator may fall to the level of 2%.
The results of the forecast have caused concern among many experts, and they are skeptical about the Federal Reserve’s rate increase until the end of this year and in the future. The maximum that can be expected is one increase, but maybe even a decrease in the rate.
The biggest threats to the U.S. economy are considered to be the slowdown in growth and the existing trade policy, which limits the country’s capabilities.
Many investors insist that Donald Trump needs to come to an agreement with China and start the process of tariff cuts. Such actions by the government will help increase business confidence and improve the economy. In addition, it will strengthen Trump’s position as president of the United States.
This year has become critical not only for the United States, but also for the world economy as a whole. On average, forecasts for GDP indicators fell by 0.4% compared to last year’s data. Under the influence of tariff increases, the decline will continue to be observed.
Despite the slowdown in U.S. economic growth, experts are optimistic and waiting for the soonest end of the trade war with China. It is extremely important to come to a single agreement, which to some extent will satisfy the interests of the two countries. However, the parties should make mutual concessions to this end.
However, some market analysts express doubts that the problems with tariffs will end after a truce with China. The question remains about the duties that the U.S. government wants to impose on cars from Europe. If the law is passed, the whole positive effect may go away.
It is expected that the Fed’s balance sheet indicator will fall to $3.5 trillion, now it is $4 trillion. In January, the forecast was $500 billion more.
The state of the shares in the market has improved significantly after the sharp decline at the end of last year. Forecasts for the S&P 500 index became more optimistic. It will increase to 2861 this year, and in 2020 will reach the level of 2925. But the index will not be able to catch up with the maximum values that were observed 10 years ago.
The slowdown of economic growth in the U.S. will also affect the lives of the population. It will be necessary to cut spending and carefully choose the directions for investment.