The second quarter of 2016 shows promise of GDP growth, despite the slowdown in the first quarter, according to a report from Capital Economics.
The recent Brexit vote will not affect the U.S. economy considerably, according to the report. In fact, the decision will not even go into effect for several years.
GDP growth for 2016 could reach about 2%, but is likely to slow from 2017 onwards, according to the report.
In fact, if the economy continues on its 2% per year growth rate, that would be enough to use up any remaining clack since the economy’s potential growth rate is lower than that, according to the report.
Although the low jobs report could be cause for concern, experts from Capital Economics say it followed the same pattern as 2012 due to similar weather patterns, warm Winters and cooler Springs, and expect it to accelerate again in the summer.
In fact, payroll employment could average 160,000 over the remainder of the year, according to the report. The pace will then slow down further in 2017 and 2018.
In contrast to the consensus and the Fed’s projections, the report states that inflation will increase sharply over the next couple years.
Due to this, Capital Economics expects the federal funds rate to reach 1.88% by the end of 2017 and 2.63% by the end of 2018.
