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Quarterly Economic Outlook - Q2 2017

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Quarterly Economic Outlook - Q2 2017

The Trump “reflation trade” is being undermined by the failure of the new administration to implement planned legislation, specifically the Affordable Care Act (the ACA, also known as Obamacare), corporate and personal tax cuts and the border adjustment tax.

Between Nov. 4 and March 1 US equity markets rallied by 15% to18%, largely in the expectation that US real gross domestic product (GDP) would accelerate and inflation would also rise, but so far there have been few signs of either. I expect only a modest upswing of growth to 2.3% in 2017 and 2.6% in 2018, a far cry from the growth of 3.5% to 4.0% that President Donald Trump promised in his election campaign.

Moreover, most of the incremental growth in 2017 and 2018 will come not from the signature Trump proposals of fiscal stimulus, tax cuts or infrastructure spending, but from the strengthening business cycle President Trump has had the good fortune to inherit.

Source : Invesco Real Estate

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