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Growth is projected to slow in the coming two years as macroeconomic policy becomes less supportive. While employment growth slows, consumption growth remains solid, supported by wage growth picking up as the labour market tightens further. Strong business investment in 2019 and 2020 is underpinned by the recent tax reform and supportive financial conditions. A weaker global outlook and already introduced trade measures weigh on activity.
The large fiscal stimulus enacted in 2017 and 2018 is continuing, albeit more weakly, in 2019; the budget will have a broadly neutral impact on activity in 2020. Monetary policy will tighten to ensure that inflation remains near the target of 2% and that inflation expectations stay well anchored. Further restraints on imports should be avoided as this would weaken domestic growth. Risks to financial stability from elevated asset prices and non-financial corporate sector debt should raise macro-prudential concerns; implementing counter-cyclical capital buffer provisions should be considered if these trends continue.
Source: OECD Economic Outlook 104 database; and Federal Reserve Economic Data.
1. General government shows the consolidated (i.e. with intra-government amounts netted out) accounts for all levels of government (central plus State/local) based on OECD national accounts. This measure differs from the federal debt held by the public, which was 76.5% of GDP for the 2017 fiscal year.
2. Personal Consumption Expenditures price index.
Source: OECD Economic Outlook 104 database.
Economic Survey of the United States (survey page)