Expects Eight Year Economic Expansion (2009-2017)
Economic forecasts for 2014 are being marked down just as the pace of global and U.S. economic growth is at a positive inflection point to faster growth, according to BNY Mellon Chief Economist Richard Hoey in his most recent Economic Update.
"The downward forecast revisions for 2014 reflect the mark-to-market of economic weakness which already occurred in the early months of this year," Hoey says. "We believe that these mark-to-market economic revisions are occurring just as both global growth and U.S. growth are at an inflection point to a somewhat faster pace of growth than has prevailed over the last several years. It is crucial to distinguish between the mark-to-market of what has already occurred and the prospects for growth over the next four to eight quarters, which should run at 3.5% to 4% for the global economy and close to 3% for the U.S. economy."
Citing a positive inflection point, Hoey believes that U.S. real growth averaged close to 2% over the past five years and will increase to an average of about 3% over the next several years. Hoey continues to expect a moderate but sustained economic expansion over the next several years in Europe, in the 1% to 1.5% growth range in 2014.
While China's economy has decelerated and the property sector is weakening, Hoey expects an orderly deceleration of trend growth rather than a major financial crisis and hard landing.
Hoey expects U.S. monetary policy to remain easy, resulting in what he believes should be a prolonged eight-year economic expansion (2009-2017), with a gradual rise in the Fed funds rate in late 2015 and 2016 followed by a more aggressive monetary tightening in 2017 or 2018 after the 2016 Presidential election.
BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.6 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies.