U.S. expansion on path to longest in history
The vast majority of economists predict this expansion will break the record for the longest one. The GOP tax cuts and additional infusion of government spending approved by both parties are expected to cause growth to pick up in the coming months.
Goldman Sachs now says there’s a 90 percent chance this expansion will break the prior record set during the 1990s tech boom. Of course, nothing is certain with the economy, but if the current expansion lasts past July 2019, it would become the longest.
Right now, the Blue Chip consensus of over 50 top economic forecasters anticipates solid growth of 2.8 percent this year and 2.6 percent the following year. No one in the group is anticipating a recession, although they note a full-blown trade war between the U.S. and China could alter the predictions.
“It will be the longest expansion ever,” predicted Allen Sinai, chief economist at Decision Economics. “I don’t even think an attempt at impeachment would stop the underlying fundamentals of the U.S. and non-U.S. economies of giving us good results.”
In an attempt to boost growth, Trump passed massive tax cuts, scaled back regulations and boosted government spending in his first year in office. The result is a large-scale stimulus that appears to be causing growth to rise but at a cost: Trump has also triggered an unprecedented expansion of the federal deficit.
“The U.S. economy is projected to grow considerably faster than potential for a few years,” the International Monetary Fund said Tuesday. But “the U.S. tax reform will reduce growth momentum starting in 2020.”
The IMF predicts U.S. growth will hit 2.9 percent this year and 2.7 percent in 2019, a level of growth that hasn’t been achieved since 2006. But the IMF also predicts the United States will be the only advanced economy to have its debt-to-GDP ratio get worse in the next five years.
“Given the increased fiscal deficit, which will require adjustment down the road, and the temporary nature of some (tax) provisions, growth is expected to be lower than in previous forecasts for a few years from 2022 onward, offsetting some of the earlier growth gains,” the IMF warned.