United States Country Risk Report Q1 2020
US economic growth will slow in 2019 and 2020 impacted by heightened trade tensions and slowing momentum in the global economy.
Our forecasts for real GDP growth of 2.2% in 2019 and 2.0% in 2020 still factor in a relatively constructive outlook for the US economy.
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 reductions in spending.
The Democratic Party's winning control of the House of Representatives in the 2018 mid-term elections augurs a period of legislative gridlock in 2019-2020 as Republicans still control the Senate and both parties move into campaign mode ahead of the 2020 elections. This is made more likely given that in September Democrats have initiated an inquiry into impeaching President Donald Trump, which although unlikely to lead to the removal of the president from office, could 'suck out the air' of ongoing policies and lead to policy stagnation.
Major Forecast Changes
We revised down our end-2019 fed funds rate forecast to 1.75-2.00%, reflecting the 25bps 'insurance cut' in September and we note downside risks to the forecast, which could see another cut before the end of 2019 and beyond.
We revised down our 2019 fiscal deficit to 4.6% in 2019 (from 4.9% previously) to reflect slightly stronger revenue growth and slightly slower expenditure.
Pelosi's announcement of an impeachment inquiry.
Foreign Policy: The White House's aggressive trade negotiating tactics and lack of clear goals risk a prolonged war of protectionism with the US's major trading partners, particularly China.
Growth: Should the slowdown in global growth be broader and deeper than we currently expect, this could negatively affect the US economy, posing downside risks to our 2019 and 2020 real GDP growth forecasts of 2.2% and 2.0% respectively.
- Executive Summary
- Core Views
- Major Forecast Changes
- Key Risks
- Country Risk Summary
- Economic Risk Index
- Political Risk Index
- Economic – SWOT Analysis
- Political – SWOT Analysis
- Economic Outlook
- Economic Growth Outlook
- Expansionary Policy Stances To Provide Some Support To US Growth
- GDP By Expenditure Outlook
- TABLE: GDP GROWTH FORECASTS
- TABLE: PRIVATE CONSUMPTION FORECASTS
- TABLE: FIXED INVESTMENT FORECASTS
- TABLE: GOVERNMENT CONSUMPTION FORECASTS
- TABLE: NET EXPORTS FORECASTS
- External Trade And Investment Outlook
- USMCA Still Unlikely To Be Ratified By US
- TABLE: CONCESSIONS OFFERED BY THE TRUMP ADMINISTRATION
- Outlook On External Position
- TABLE: TOP GOODS IMPORTS IN 2018
- TABLE: TOP GOODS EXPORTS IN 2018
- TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
- TABLE: CURRENT ACCOUNT BALANCE FORECASTS
- Monetary Policy
- US Fed To Remain On Hold, But Risks Of More Cuts Still High
- TABLE: FOMC'S ECONOMIC PROJECTIONS
- Monetary Policy Framework
- TABLE: MONETARY POLICY FORECASTS
- Fiscal Policy And Public Debt Outlook
- US Budget Deal Positive For Short-Term Fiscal Picture, But Long-Term Risks Rise
- Structural Fiscal Position
- TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES (2017)
- TABLE: FISCAL AND PUBLIC DEBT FORECASTS
- THIS 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.United States Country Risk Q1 2020ContentsCurrency Forecast
- US Dollar View: From Neutral To Bullish
- 10-Year Forecast
- The US Economy To 2028
- Slower Growth Long Term
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
- Political Outlook
- Domestic Politics
- Trump Impeachment Inquiry: Initial Reactions
- Domestic Politics II
- US Economic Policy Becoming Less Predictable
- Long-Term Political Outlook
- Long-Term Challenges Remain
- 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
- Downside Revisions To Stabilise Somewhat, But Policy Risks Remain
- TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
- TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
- TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
- Index Tables
- TABLE: UNITED STATES – MACROECONOMIC DATA AND FORECASTS