Carl Weinberg & Jim O’Sullivan
May 16, 2018, at 10:30 EDT (15:30 BST/16:30 CEST)
GDP Growth Falters In G-7 Ex-United States—It Is More Than The Weather
– Carl Weinberg
United States: Declining Slack To Keep Fed Tightening
– Jim O’Sullivan
Bad weather hurt the six smaller G-7 economies in the first quarter, but growth was already faltering before the first snowflake hit the ground: Europe is constrained by credit, Britain is hobbled by Brexit uncertainties, Japan is running up inventories and Canada is wobbling on special factors. Yet emerging market growth is holding up nicely, especially in China, where most of the incremental growth of the global economy is generated. This is a time to pay attention to the emerging world and to count less on advanced economies’ prowess.
GDP growth slipped in the United States in Q1 as well, but the 2.3% pace was still solid by recent standards. Q1 readings have tended to be below trend for statistical reasons, and fiscal policy will be much more stimulative in Q2. Meanwhile, through the volatility, and despite some trade-related jitters, employment growth remains more than strong enough to keep the unemployment rate trending down, while wage gains and inflation are moving up. Fed tightening is likely to continue unabated for a while.
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