Chief economist of Goldman Sachs (GS), Jan Hatzius, answered eight questions of which he believes that they will affect the US economy the most over the coming year. In summary this is what his answers were:
Will the US economy keep growing?
Yes, domestic demand will compensate for weaker foreign demand.
Will the stronger dollar impede growth?
Most likely, but it is a manageable situation because of the lower oil price.
Will the recovery in the real estate market continue?
I expect absolute recovery in real estate. Especially for real estate that attracts young and single adults.
Will consumer spending growth speed up?
Yes, the real disposable income of households has increased because of the lower oil price.
Will capital expenditure growth continue?
No, corporate spending is not out of sync with the fundamentals in the long term. Next to that the lower oil prices will have an effect on energy companies.
Could wage growth move to 3 to 4 percent, which is what Yellen considers ‘normal'?
No, I do not expect that. Growth on the job market is still lagging.
Will the inflation rate hit the Fed's target of 2 percent?
I do not believe so. The dollar is too strong at the moment, wage growth is too low, and the weaker oil price has a negative impact on inflation.
Will the Fed raise interest rates during the FOMC meeting in June?
I do not assume they will. They will probably not have reached their inflation target of 2 percent and based on our predictions for wage growth and inflation I believe it will only happen after June. In our base scenario September is the best assumption.
