US economy to grow at 2.3 percent for 2017 - Wells Fargo

Analysts at Wells Fargo Securities expect the US economy to grow at 2.3 percent on average for the rest of 2017.

Key Quotes

“We began 2017 with the assumption that economic policy would be slow to evolve and that aggregate economic activity would differ little from the trend of recent years. Given our legislative experience and our assessment of the complexity and conflicting interests on policy issues of health care, tax reform and trade, we decided to wait until policy initiatives became clearer before altering our trend economic forecast.” 

“Once again, 2017, as in prior years, looks likely to begin with a slow start, as we anticipate below a one percent gain on overall GDP growth. The rest of 2017 is expected to come in at 2.3 percent on average. Real final sales will be supported by steady growth in consumer spending and an improvement in business equipment spending and structures over the 2016 pace. Government spending will add modestly to overall economic growth while trade remains a drag.”

“Inflation, as measured by the PCE deflator, will continue to persist near or above the FOMC’s 2 percent target, and we anticipate that the FOMC will increase the funds rate in June and again in the second half of this year. Benchmark two- and 10-year U.S. Treasury rates are expected to rise modestly with the spread narrowing as the year progresses.” 

“A pick up in the employment cost index, along with continued modest top-line nominal GDP growth, indicates a modest improvement in economic profits in 2017.”

“We expect that the trade-weighted dollar will continue to appreciate in 2017 as U.S. short-term rates rise.”