A TD Bank economist shared the bank’s predictions for the U.S. economy with advisors at the National LINC Conference this week, but much of the outlook was dependent on fiscal policy decisions yet to be detailed by the new president.
Derek Burleton, the vice president and deputy chief economist of TD Bank Group, said that “finally, the recession appears to be over.” He thinks the U.S. economy will grow by 2.2 or 2.3 percent in 2017. However, that does not account for any federal stimulus the Trump administration has said it intends to provide. He also expects the dollar to remain “on a high perch” through the rest of this year.
In comparison to 2016, the U.S. economy “seems to be getting it together,” Burleton said. It is just looking for some direction.
Yet, without any formal stimulus plan from the President, specific trade policies the administration has in mind, or how many times the Federal Reserve will raise interest rates, the future of 2017 is clouded.
Burleton said infrastructure spending, changes to the corporate tax system and rising inflation rates could be good for the economy. The question is: to what extent are those things going to happen and when? Right now, those things are only “aspirational.” Until legislation is passed, the outlook will not reflect any changes.
“I think, at the end of the day, Trump will be judged not by growth, but did he make the economy stronger?” Burleton said. “They should not be stimulating for the sake of stimulation.”
Federal Reserve officials said it expects to make three quarter-point moves in 2017. Burleton said he expects there will be two rate hikes in 2017.
He also expects crude-oil futures to remain below $60 per barrel into 2018 and the world year-over-year GDP growth to be below 5 percent.
“The fact is, we don’t see a lot of big changes on the global landscape,” he said. “We've got slow economies that are struggling with the ages.”