Well the IMF seems to think so, in it’s latest assessment of the US economy the International Monetary Fund reduced it’s growth forecast for the US by nearly a third. They also suggested that perhaps there was still some need for the virtually nil interest rates to remain at that rate for the time being.
The estimates of the US economy fell by .8% from the April estimation, to an expected growth rate of 2% in 2014. Why the turnaround? Well the first quarter results were weak although this was very probably due to the very severe winter impacting on all areas of the economy from employment, housing through to retail sales.
It’s not all bad news, it seems that the IMF considered this to be just something of a blip in the recovery – maintaining the 3% growth estimate for 2015. The caveat for this though is to increase the minimum wage and keep investing heavily in it’s infrastructure which could be difficult in the political climate.
This reduction in estimates wasn’t entirely unexpected as the IMF had already hinted that this would happen in relation to the poorer growth results in many of the other major economies across the world. The Ukraine crisis is also having an impact on economic growth particularly if sanctions on Russia are increased.
It’s going to mean that there’s some impact on the markets, employment goals are not going to be reached until 2017, and it’s expected this will be in an environment of low inflation. It’s one of the reasons that the IMF is urging the US to keep it’s interest rates low, the markets were expecting a rise after mid-2015 but that could be later now if the advice is heeded.
The US equity market like that of most of Europe is experiencing rises virtually across the board. This is of course partly due to the low interest rates making investment cheaper and of course a stream of positive indicators. The pressure will be upwards on shares the longer the interest rates stay low. There are worries of a market correction within the equity market with many experts hedging fund with safer investments like telcos and utility companies.
You can check the latest share prices and get some excellent investment advice on some of the US media and equity research funds. Beware though due to the sometimes complicated state tax and federal laws, these are often limited to US only customers, unless you buy VPN services and use them remotely of course.
Richard Hargreaves II
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