1. Economic Outlook Raymond James Equity Research Scott J. Brown, Ph.D.
October 2, 2018
Scott J. Brown, Ph.D.
Raymond James
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2. Topics Current Economic Conditions growth, employment, inflation
Fiscal Policy
Federal Reserve Policy
The Economic Outlook
Risks

3. Growth in underlying domestic demand is strong

4. Job growth has remained strong

5. The job market has grown tighter

6. Inflation has remained moderate

7. Nominal wage growth has picked up somewhat

8. Inflation-adjusted wage growth has been weak

9. Government has lagged in this recovery

10. State & local gov’t was a drag in the early recovery

11. Fiscal stimulus = a wider federal budget deficit

12. Trade Policy Why trade? GATT (post WWII) -> WTO (1995)
benefits vs. drawbacks
Why does the U.S. have a trade deficit?
Should we focus on the bilateral trade deficit?
China’s trade surplus is 1.3% of its GDP
Trump Trade Policy
Tariffs on lumber
Tariffs on washing machines
Tariffs on steel and aluminum (section 232)
(NAFTA 2.0) USMCA
China: 25% tariffs on $50 billion (mostly industrial inputs)
10% on $200 billion (inputs, capital goods, consumer goods) rising to 25% in January
possible tariffs on another $267
Auto tariffs (section 232)?

13. Demographic constraints will dampen growth

14. Demographic constraints will dampen growth

15. The Fed expects growth to slow

16. The Fed expects to tighten gradually

17. Long-term interest rates are poised to move higher

18. Risks to the Outlook Geopolitical Tensions
Korea, China, Russia, Middle East, etc.
A Misstep on Trade Policy (China)
Disruption of supply chains
Fed Tightens Too Much
Soft landings are hard
Bubble?
Excessive optimism / Capital misallocation
Excessive leverage
Political
Mueller Investigation
2018 Midterm Elections

19. Summing Up