Joseph Brusuelas, chief economist at RSM U.S. LLP, said in his firm’s latest economic report that the U.S. economy is poised to grow 1.9 percent this year — buoyed by “robust” growth of 2.5 percent in the second quarter. The economy clocked a gain of 1.4 percent in the first quarter.
“We anticipate solid, if unspectacular growth in the second half fueled by solid consumer spending, which is on track to increase by 3 percent in the second quarter, and just under that throughout the remainder of the year,” Brusuelas said. Other authors of the report include John Nicolopoulos, national retail and restaurant sector leader at the firm and Michael Schwartz, who serves as principal.
Although key economic indicators are on track to show expansion, there’s been some hiccups. Brusuelas noted that “a mild housing recovery appears to have stalled on the back of tightening lending standards and supply constraints, with housing starts increasing at a 1.25 million unit pace on an annualized basis.”
“The manufacturing sector continues its modest rebound, with risks being the slowing demand for autos and the impact of the U.S. dollar appreciation on exports,” he explained. “These two areas of the economy represent the major domestic risk to the outlook. Given that this is the ninth year of the cyclical expansion, these two sectors demand close monitoring heading into 2018.”
There are some bright spots such as employment. Brusuelas said on “a more encouraging note, the labor market continues to thrive and the probability of a recession is quite low at around 15 percent.”
“The unemployment rate declined to 4.3 percent in June with job growth averaging 162,000 new jobs per month after averaging 181,000 per month during the past 12 months,” Brusuelas said. “Given the underlying labor dynamics, it wouldn’t be surprising to see a slower pace of monthly job growth even as the unemployment rate declines toward 4 percent by the end of this year.”
With gasoline prices declining, the economist expects “a strong domestic vacation season” this summer that supports “sales for restaurants, hotels and entertainment establishments.”
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