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Outlook Remains Bright

Posted August 11, 2014

Under Economic Issues, International Trade Issues

(Peter Hall – EDC)

Daily news seems to run cross-grain to this week’s title. A deepening crisis between Russia and Ukraine. Intensifying strife in the Middle East. A rapid outbreak of deadly disease in West Africa. Wild weather and natural disasters. Some are concluding that we need to factor in these events – which used to be called anomalies – to our forecasts, given their recent frequency. Yet at the same time, the economy is chugging along, and gaining momentum as we speak. There are still a number of key reasons that the forecast remains upbeat. Here goes:

First, the US economy is continuing to gather strength. True, forecasts have been revised down substantially from early-year estimates, but dig a little deeper and it’s obvious that the write-downs are all due to temporary factors that hit first-quarter output. With that now behind us, the second quarter was up by 4 per cent, an unleashing of the pent-up pressure in the previous three months. The most recent consensus outlook expects this pace to persist in the second half of this year. We agree – multiple signals show that the US economy is still operating below normal, and with employment and sentiment both improving, the economy is poised for a strong run of growth. Read more here.