Reportedly, Robert Kaplan—President of Fed (Federal Reserve) Dallas—anticipates the U.S. economic development to slow considerably during the fourth quarter as businesses worried due to the trade war are trimming their inventories. Kaplan said to CNBC, “We estimate the fourth quarter is going to be weak.” The central bank executive attributed the feeble growth level to “deglobalization” as a consequence of tariffs the U.S. and China have enforced against each other in their trade battle. Whilst Kaplan did not put a particular level where he feels the GDP (gross domestic product) gains will decline, projections from the Atlanta and New York Fed are estimating an increase of 0.4% and 0.7%, respectively.
Whereas CNBC’s Rapid Update measure of economist prospects stated the number close to 1.5%. Kaplan asserted the inventory decline is possibly cutting half a point off GDP. The insecurity over future circumstances is at the midpoint of the low expectations. Kaplan said, “This shows that people have been destocking as there was a lot of negativity over the last few months about future growth prospects. We feel things will become stable. We have got a good possibility to grow up by 2% in the next year.” In the longer term, he sees the U.S. is progressing in a range of 1.75–2%, although that slowed pace can come under pressure.
On a similar note, recently, Jerome Powell—Chairman of the Fed—stated that the central bank is “strongly dedicated” to 2% inflation goal, which is an indication that rates are possible to hold steady. With the final 2019 summit of Fed policymakers just 2 Weeks away, Powell signaled that interest rates are doubtful to rise anytime soon, as the central bank is firmly committed to meeting its inflation target. The Fed thinks a 2% inflation rate to be a precursor of sustainable development and a level that maintains interest rates higher to allow mobility in the incident of an economic downturn.
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