INVESTMENT BOOK                070318

By Isacc Cohen*

Estimates of economic growth in the United States, during this year’s second quarter, reveal a vigorous performance. For instance, the Federal Reserve Bank of Atlanta estimates 2.8 percent growth on an annualized basis. The International Monetary Fund projects 2.9 percent growth for this year. That is close to the White House growth target of at least 3 percent.

The Director of the National Economic Council Lawrence Kudlow, quoted in The Wall Street Journal (07/02/18), said the US economy has “entered an investment boom,” adding “We’re going to get over 4 percent real GDP in the second quarter and it looks like we’ll have a very strong second half of the year.”

Several factors are contributing to what is already the 10th year of the second longest expansion of the US economy. Among them last year’s tax reductions figure prominently and also an increase in exports in April and May.

However, there are clouds in the horizon which make risky to extrapolate single quarter figures. Inflation is moving past the 2 percent central bank objective. Also, the White House decision to imposing tariffs against imports from major trading partners has already undermined business confidence. The Dow Jones Industrial Average lost 4.1 percent over the past three weeks, which pushed down the index 8.8 percent, from the peak of January 26, wiping out the gains of 2017.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.