Page 6 - Economic Outlook Romania 2019
P. 6

USA: Growth cycle peaking, headwinds ahead






         Best recession forecaster:                   The second-longest US                       UST Spread recession
         the shape of US yield curve                  expansion on record                         probability 12M ahead


           4.00                               1.0      140                                          50
                                                                                                    45
           3.00                                        120
                                              0.8
                                                                                                    40
           2.00
                                                       100                                          35
                                              0.6
           1.00
                                                        80                                          30
           0.00
                                              0.4                                                   25
                                                        60
           -1.00                                                                                    20
                                              0.2
           -2.00                                        40                                          15
                                                                                                    10
           -3.00                              0.0       20
                                                                                                     5
                                                        0                                            0

                   US recession    10Y - 2Y (bps)


         Self-fulfilling prophecy                     Firing on all cylinders                     The ‘R’ word

         Fed Powell downplayed                        Unemployment is near                        Yield curve inversion preceded

         the importance of the                        record lows, GDP growth                     all nine recessions since 1955.
         yield curve. We look for                     on track and inflation is                   Budget deficit at $1 trillion USD
         another rate hike in                         above target. Fed is                        in 2019 (5%/GDP) can help

         2019.                                        unlikely to change course.                  prolong the economic cycle.



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