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US: 2016, the kind of year it’s going to be – Goldman Sachs

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 11, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at Goldman Sachs, forecasts that US growth will remain modestly above potential, averaging 2¼% next year.

    Key Quotes

    “To be sure, the US economy is not firing on all cylinders, with a significant drag from net exports and subpar capital spending. But so far other components of final sales—consumption, housing and government spending—have provided a sufficient offset, and we expect that to be the case in 2016 as well.

    Consumer spending should remain strong as long as labor income growth holds up, but the windfall from lower gasoline prices is set to fade. We expect another solid year for housing investment, and forecast that overall business fixed investment will improve slightly as the drag from energy capex diminishes.

    Reduced slack in the labor market and the economy more broadly should result in a pickup in both wage and consumer price inflation next year. A stabilization in import prices and higher medical care inflation should help the core PCE measure rebound.

    We expect the Federal Reserve to raise rates four times in 2016— roughly two more than currently priced in. The market’s estimate of the terminal funds rate may also rise from historically low levels. Normalization of the Fed’s balance sheet still looks some time off—we expect full reinvestment to continue until mid-2017.”
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