The "new normal" turned into the old normal: Our economic outlook for 2018
Highlights from our 2018 outlook include:
The United States: The U.S. economy has moved beyond eight years of ultra-slow recovery into sustained expansion.
Greater Europe: The revival of the Eurozone economy was the growth surprise of the last year.
China: China's economy is robust. Like the rest of the world, China experienced a solid reflation after the crisis-laden summer of 2015.
Japan: After years of struggling with slow growth and deflation, Japan's economy is adding its share of progress to the world expansion.
World economies: The rest of the world's economies are benefitting from the solid rebound in commodity prices and improving demand from China, the Eurozone, and the United States.
Inflation and interest rates: The belief that inflation will stay subdued indefinitely has become consensus mantra.
Asset allocation: Ultra-low interest rates have been a key driver of the persistent rise in stock prices since the U.S. crisis trough in March 2009.
In this year's outlook we'll examine the outlook for the United States and the rest of the world, ask if the coming fiscal stimulus in developed countries could boost this expansion even further, try to shed some light on how central bank attempts to normalize monetary policy might impact the stock market, and investigate the asset class implications of this cyclical upturn and of less-accommodative monetary policy. We conclude that this vigorous growth will persist well into 2018, with perhaps some mild deceleration late in the year as central banks tap the brakes. Long-term interest rates should be under moderate upward pressure and will be a significant headwind for equity markets.
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