United States: view in a nutshell - Nomura

Analysts at Nomura offered a snapshot at their expectations for the US economy as follows:

Key Quotes:

• We expect the economy to grow slightly above potential, but productivity growth to remain subdued.
• We see slightly better growth in H1 2018 owing to modest tax cuts possibly enacted in early 2018.
• We believe potential growth will remain low due to weak productivity growth and an aging population.
• Inflation should be lower in the near term and pick up gradually in the medium term as labor markets tighten.
• We expect the FOMC to raise short-term interest rates in December, twice more in 2018, with no further hikes in 2019.
• In the interim, we expect roll-off of the Fed balance sheet to raise long-term interest rates only gradually.