Growth to accelerate in 2018 to an annual pace of +2.9%, the fastest since 2005, boosted around
0.7pp by the combination of tax cuts and increased government spending.
Economic momentum remains very strong and supports our above-consensus expectations for
growth this year. The latest survey data signal very robust sentiment and healthy activity in the first
quarter, and financial conditions remain supportive of growth despite recent volatility.
Recent wage and price data supports our expectation for inflation to surprise to the upside this year.
Labour markets have tightened, a weaker dollar supports import prices, and underlying inflation
measures are near multi-year highs.
The dollar has weakened despite reduced accommodation from the Fed. This should add a few tenths
of a percentage point to both inflation and growth this year. We expect this trend to continue, as the
US fiscal and current account deficits continue to widen in unison.
EU Forecast
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