Capital Economics: US economy about to shift into high gear
Woo-hoo! Higher wages on the way!
The positive economic predictions keep coming in.
First, Nomura predicted the GDP will double next year.
Now, Capital Economics is predicting the economic recovery in the nation is about to shift into “a higher gear.”
“The fiscal drag has eased, household debt has fallen to more manageable levels and property prices have recovered,” according to the executive summary of the third quarter Global Economic Outlook from the analytics firm.
“It probably won’t be long before the tighter labor market triggers a rise in wage growth which in turn should feed through to higher core inflation,” the report states.
“We expect this to persuade the Fed to raise rates more rapidly than the market currently expects, with the fed funds rate likely to be around 3% by the end of 2016,” it adds.
The report pegs the recent slowdown in economic activity as the result of the unusually severe winter and not indicative of a long-lasting economic slowdown.
However, Eurozone countries, with the exception of the UK, will experience a continued slowdown, the report predicts.
This will help keep inflation low, although in the United States inflation will grow as interest rates begin to rise gradually, expected some time next year.