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Electricalmarketing 2841 Growth Gettyimages 884650780 1024
Electricalmarketing 2841 Growth Gettyimages 884650780 1024
Electricalmarketing 2841 Growth Gettyimages 884650780 1024
Electricalmarketing 2841 Growth Gettyimages 884650780 1024
Electricalmarketing 2841 Growth Gettyimages 884650780 1024

IHS/Markit Says Strong Dollar is Choking Off Domestic Demand

June 22, 2018
Forecasts a sharp but temporary downshift from the approximately 3% growth over most of the previous year.

IHS/Markit recently published some updated forecasts for key economic indicators. The chart below offers a quick look at the numbers. Here is what IHS/Markit sees for GDP growth over the next few years.

“First-quarter GDP growth was revised down 0.1 percentage point, to 2.2%, in the Bureau of Economic Analysis’ second estimate, a sharp but temporary downshift from the approximately 3% growth over most of the previous year. Since we completed our last forecast, the incoming data have led us to raise our forecast of second-quarter GDP growth by roughly a full percentage point, to 4.1%. The main contributors to this markup were two reports: one on the trade balance and the other on personal consumption expenditures, both for April, and each indicating much firmer momentum for output early in the second quarter.

“Our forecast for the second half of this year is little changed, at about 3.0%, implying 3.1% (fourth quarter over fourth quarter) GDP growth for 2018 (0.2 percentage point above last month’s forecast). After this year, GDP growth slows in our forecast. While equity values jump off and remain higher in this month’s forecast, so too does the dollar, as concern for conditions in Europe have redirected international capital flows into dollar-denominated assets.

“Furthermore, the U.S. withdrawal from the Iran nuclear deal (and the implied threat of renewed sanctions), combined with other supply concerns, has raised oil prices above our prior forecast. Over the next two years, we forecast annual GDP growth of 2.8% and 1.8%, respectively. The unemployment rate reaches a low of 3.4% in 2019, before beginning to turn up, and core PCE inflation rises to 2.3% by 2020.”