The Federal Reserve delivered on its widely expected quarter-percentage point interest-rate cut at the July meeting. It was the first reduction since 2008 and came in response to slowing global economic growth and muted inflation.
The simmering trade war between the United States and China is expected to continue, and could put the economy at risk.
There is a significant likelihood that U.S.-China trade tensions will remain high. Effects on global GDP effects are uncertain, but could exceed 1%.
The Fed’s “dot plot” in March, representing individual forecasts by 17 Fed policymakers, showed a reduction in the number of rate hikes for 2016.
Despite worrisome headlines about the economy, recent data show only a modest loss of momentum.
Putnam’s macroeconomic research identifies factors that point to continued weakness in the long-term growth potential of several major developed countries.
Our analysis of TFP — Total Factor Productivity — gives us confidence that innovation can sustain long-term economic growth at pre-2008 levels.
While energy consumption had been relatively stable in the developed world, supply has continued to expand.
Despite ups and downs in quarterly GDP, we see trends that herald the economy’s return to the “old normal,” pre-financial crisis pace of growth.