New Podcast: SIFMA’s Economic Advisory Roundtable Forecasts 2.5% GDP in 2018

Brett Ryan, Senior U.S. Economist for Deutsche Bank Securities and chairman of SIFMA’s Economic Advisory Roundtable, reviews the Roundtable’s U.S. 2017 year-end economic outlook. The Roundtable forecasted that the U.S. economy will grow 2.3% in 2017, strengthening to 2.5% in 2018. The current outlook for the close of 2017 and into 2018 is stronger than the Roundtable’s mid-year predictions, however the group is keeping a close eye on fiscal policy as well as monetary policy, which is generally expected to remain on a path of gradual tightening.

Listen to the podcast or download the report for more on:

  • The Economy: The median end-year forecast calls for 2017 gross domestic product (GDP) to grow by 2.3 percent on a year-over-year basis. For 2018, the end-year forecast calls for GDP to grow by 2.5 percent on a year-over-year basis. Employment is expected to continue improving, and respondents predict the unemployment rate to average 4.4 percent in 2017, falling to 4.0 percent in 2018.
  • Monetary Policy: Respondents were unanimous in their expectation that the Federal Open Market Committee (FOMC) will raise the Federal Reserve’s target rate range by 25 basis points at the December 12-13, 2017 meeting. The Roundtable was split on the number of rate hikes expected in 2018 with 41 percent of respondents expect three rate hikes in 2018, 38 percent of respondents expect two, 17 percent expect four rate hikes and the remainder, only one rate hike.
  • Interest Rates: The median survey forecasts for 10-year Treasury rates were: 2.45 percent for December 2017, 2.55 percent for March 2018, 2.66 percent for June 2018, 2.80 percent for September 2018 and 2.80 percent for December 2018. Inflation and inflationary expectations was the dominant factor cited impacting Treasury yields in the first half of 2018, followed U.S. economic conditions and FOMC interest rate policy.
  • Risks to Growth: U.S. fiscal policy was considered the most important factor impacting U.S. economic growth, closely followed by Federal Reserve actions. Upside risks most often cited include tax reform, fiscal stimulus and inflation. On the downside, global slowdown, geopolitical shocks and a market correction impacting confidence were the leading causes for concern.
  • Policy Outlook: Respondents were divided on the impact that the uncertainty regarding major government initiatives would have on GDP in 2018. Most respondents (79 percent) were evenly split between expecting no impact or a positive impact to GDP growth.
  • Tax Reform: Most respondents (86 percent) expect tax reform to be enacted. When asked which aspect of tax reform would have the most positive impact on U.S. economic growth, reform of corporate rates was the most oft-cited aspect, followed by international tax reform. Most respondents expect the tax reform package to increase the long-term potential growth rate of the U.S. economy.

This podcast is subject to the Terms and Conditions of SIFMA’s website.