While we retain our broadly positive outlook for the US consumer heading towards 2018, amida tight labour market, robust consumer confidence and stronger economic growth, we note a number ofheadwinds to this view. Mediocre wage growth, higher oil prices from Storm Harvey, and ongoing policyparalysis in Washington, which will likely disappoint households and lead to watered-down tax cuts,present downside risks to consumer spending prospects.
Our Country Risk team have downgraded our 2018 real GDP growth forecast for the US from 2.2% to2.1%, below consensus expectations of 2.3% (which in turn have come down from 2.4% since thebeginning of 2017).
While we are generally constructive on the prospects for US consumers, we expect a solid albeitunimpressive growth trajectory for private consumption ahead. We forecast real private consumptiongrowth to continue to moderate from 3.6% in 2015, and 2.7% in 2016, to 2.7% in 2017, and subsequently2.2% in 2018.