ARLINGTON, Va.—Economic uncertainty is ahead for the U.S. next year, due largely to President-elect Donald Trump’s economic agenda, according to a new forecast from NAFCU Chief Economist and Director of Research Curt Long.
In the trade association’s Economic & CU Monitor this week Long stated, “Conditions abroad remain tenuous. A year ago, slowdowns in China appeared to be the greatest area of concern, while today Europe looks to be more of a near-term threat, as 2017 will see Britain seeking to work through its exit from the EU, and several continental elections could be impacted by the recent wave of populism. But the greatest source of domestic uncertainty by far is Trump’s economic agenda, and its potential to boost short-term growth.”
Long noted that a fiscal stimulus package could help boost inflation rates to the Federal Reserve’s goal of 2%, but he said Trump’s economic growth targets might be threatened if improving inflation causes the Federal Open Market Committee to raise interest rates more quickly, slowing the economy. He also noted that the FOMC’s plan of four rate hikes in 2016 was altered by economic turbulence in China and the Brexit vote in the U.K., but the committee has said it expects three more quarter-point raises next year.
Long noted auto sales continue to be strong, while growth in the housing market will likely continue to be “frustratingly slow.” He predicted that wage growth will improve next year, helping create more disposable income that will support consumer spending growth.