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United States Country Risk Report Q1 2019

United States Country Risk Report Q1 2019

The short-to-medium term growth outlook for the US economy remains constructive due to a tightening labour market, a continued recovery in private invest-ment and expansionary fiscal policy

Wider budget deficits and a higher debt-to-GDP ratio are on the cards in the years ahead as tax cuts lower revenue but are not accompanied by offsetting reduc-tions in spending

We expect the opposition Democratic Party to regain control of the House of Representatives in the 2018 midterm elections, meaning that legislative gridlock in 2019-20 is highly likely Major Forecast Changes

We revised our end-2019 Fed funds rate forecast to 3 00%-3 25% from 2 75%-3 00% This implies three rate hikes in 2019 from our end-2018 forecast of 2 25%-2 50% This comes off the back of the Fed's increasing confidence in the economic growth outlook, a tight labour market and rising wage pressures

Key Risks

Foreign Policy – The White House's aggressive trade negotiating tactics risks and a lack of clear goals risks a prolonged war of protectionism with the US' major trading partners, including China

Trump Ignores Congress – Rising legislative gridlock could see Trump embark on a string of executive orders dealing with foreign policy, trade and immigration, which could have far-reaching economic and financial market implications


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
US Growth To Be More Robust In 2018
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: NET EXPORTS FORECASTS
Monetary Policy
More Hawkish Monetary Policy Stance To Come From US Fed
TABLE: US FOMC VOTING MEMBERS FOR 2019
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
External Trade And Investment Outlook I
Trade Tensions Escalate As New Tariffs Kick In
External Trade And Investment Outlook II
Cyclical And Structural Factors Will Widen The US Current Account Deficit
Outlook On External Position
TABLE: TOP GOODS IMPORTS IN 2016
TABLE: TOP GOODS EXPORTS IN 2016
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
United States Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsFiscal Policy And Public Debt Outlook
Fiscal Stimulus In The US Set To Support Growth, But Pose Longer-Term Risks
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES (2017)
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
10-Year Forecast
The US Economy To 2027
Growth To Slow Over The Long Term
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Trump Administration To Retain Assertive Foreign Policy Beyond MidTerms
Long-Term Political Outlook
Domestic And External Challenges Ahead
Operational Risk
Developed States
TABLE: LABOUR MARKET RISK INDEX
TABLE: LOGISTICS RISK INDEX
TABLE: CRIME AND SECURITY RISK INDEX
TABLE: TRADE AND INVESTMENT RISK INDEX
Global Macro Outlook
Contagion Risks Limited To EMs For Now
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: UNITED STATES – MACROECONOMIC DATA AND FORECASTS

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