Since the recession ended in mid-2009, the U.S. economy has averaged annualized growth of just 2.2 percent, and the Bloomberg consensus forecast does not expect it to grow much faster in the year ahead. Estimates of real growth are just 2.4 percent in 2018. Some forecasters assume a stronger expansion as a result of the Trump administration tax legislation. Our sense is that the consensus appears awfully complacent, as growth is picking up regardless of changes to fiscal policy. Thus, there are upside risks.
For starters, the economy is already growing at 2.4 percent in 2017. After a weak first quarter, it seems poised to post three consecutive quarters of at least 3 percent growth. Current quarter tracking estimates from the New York Fed and Atlanta Fed are 3.8 percent and 3.4 percent, respectively. If these estimates hold, it would indicate strong momentum heading into 2018. In contrast to previous years, when growth estimates were generally cut as time went on, these expectations will likely move up as 2017 comes to a close.
