US economy continues growth spurt but sustainability in question

The general picture of US economic growth will remain largely unchanged when 2017’s fourth quarter estimate is released today.

Expanding at its fastest rate since 2014, the economy’s growth is expected to exceed 3% for the third consecutive quarter. The bullish result supports plans by the Federal Reserve to raise interest rates from the current 1.5% to 2% over the course of 2018.

The announcement coincides with President Trump’s economic victory lap at the World Economic Forum today. The passage of $1.5 trillion in Republican tax cuts last December has seen the IMF revise US growth forecasting for 2018 from 2.3% to 2.7%. With imports expected to continue falling and joblessness below the 4.1% threshold for full employment, Mr Trump will have all the ammunition he needs when he brings his “America First” message to the global economic leadership.

Despite the US economy’s short-term success, both the Fed and the IMF warn growth won’t last. Current predictions see an increasing budget deficit and the sustained rise of interest rates slowing growth significantly by the end of 2019, possibly putting a recession in the cards for the latter stages of the Trump presidency.