Economy riding wave of fiscal stimulus

The acceleration in GDP growth, to an impressive 4.1% annualised in the second quarter, is principally due to the massive fiscal stimulus unleashed at the start of this year. Unfortunately, there is little evidence that tax cuts have improved the supply side of the economy. With the fiscal stimulus set to fade and the stronger dollar and rising borrowing costs beginning to bite, we expect GDP growth to slow to a more modest 2% in 2019.