2019, a year of strong growth for US

Fed would keep keen watch
to ensure muted inflation!

Despite Goldman, Forbes, economic analysts feared a slower US economy in 2019, Vice Chairman and member of the Board of Governors, US Federal Reserve, Richard H. Clarida said, “In terms of the economic outlook, ongoing momentum heading into this year indicates that that above-trend growth is likely to continue in 2019.” He was speaking on Monetary Policy Outlook for 2019 at the Money Marketeers of New York University.

As we begin 2019, the initial conditions for the real economy are favorable. Through the first three quarters of last year, gross domestic product growth averaged 3.2 percent. Private-sector forecasts as well as our Summary of Economic Projections indicate that, when the data for the fourth quarter are released, they will show the economy likely grew at 3 percent or perhaps a little faster in 2018 for the year as a whole.

If so, economic growth in 2018 would be the fastest annual growth rate recorded in 13 years. In terms of the economic outlook, ongoing momentum heading into this year indicates that that above-trend growth is likely to continue in 2019. If the economy continues to grow in 2019 along the lines that I expect, in July the current expansion will become the longest in recorded U.S. history.

With labor supply and productivity growth in 2018 having surprised on the upside, some mean reversion in 2019 is not unreasonable to forecast. But right now, that is just a forecast, and if the positive developments on the supply side of the economy continue in 2019, they would need to be factored into the inflation outlook and thus the appropriate settings for monetary policy.

Though he said the Fed would keep keen watch to ensure muted inflation! The U.S. economy enters 2019 after a year of strong growth, with inflation near our 2 percent objective, and with the unemployment rate near 50-year lows. 

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