Fiscal stimulus will prompt more monetary tightening

With the benefits of the fiscal stimulus, strong global demand and the weaker dollar, we expect GDP growth to accelerate to 2.8% in 2018. As the fiscal stimulus begins to wear off and the cumulative monetary tightening starts to bite, however, GDP growth will slow sharply in the second half of 2019. While it isn’t our central assumption, there is a risk of a modest recession developing in either late 2019 or in 2020. We anticipate that GDP growth will slow to 2.0% in 2019 and only 1.5% in 2020.