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There is no doubt that the economy is going through a difficult period. The big question is whether the situation gets worse before it improves.
Bet on the acceleration of growth. The economy has slowly started a new year slowly since the release of the last US recession in the middle of 2009. And growth has generally resumed in the spring.
The same pattern seems ready to reappear and early clues could reach us from the first batch of reports on the evolution of the economy in March.
See: MarketWatch Economic Calendar
The gross domestic product, the official scoreboard of the economy, is expected to grow by a modest 1.5% in the first quarter, according to the latest survey of MarketWatch economists. Economists then see GDP accelerate at an annual rate of 2.5% in the spring.
The main difference between this year and the last? There are no big tax cuts or spending increases from the powers in Washington. The economy gained momentum last spring thanks to the generous hand of Congress and the White House.
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Nevertheless, the economy does not suffer exactly from a lack of support.
The Federal Reserve, for example, announced at the end of January its intention to abolish plans to raise interest rates again. This led to a drop in interest rates on business loans, mortgages and other consumer goods. Look for home sales especially to relaunch.
The stock market
DJIA, + 0.54%
,
SPX, + 0.50%
during that time, recovered from a painful fall in December. Consumer confidence rebounded after the merger of the market and the partial closure of the government. And the unemployment rate dropped to 3.8% in February, reflecting the strongest labor market in decades.
A robust labor market, in turn, hardly guarantees that households will continue to advance the economy. Consumers have spent a little less than they have earned in recent months, but that should not last. Spending over time tends to track income gains very closely – and wages increase by more than 3% per year.
"Do not forget that consumer spending accounts for nearly 70% of US GDP," said Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute.
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The icing on the cake could be a US deal with China that would solve a tense trade dispute that has put business leaders in crisis and disrupted the economies of both countries. Business investment in the United States began to slow as the conflict warmed last summer and was not fully restored.
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Even with these winds in the back, the economy will probably not grow as fast as last year.
It is generally expected that the Fed will reduce by an inch or two its forecast of 2.3% of GDP in 2019 at its two-day meeting devoted to the examination of the economic situation.
The United States grew 2.9% last year to a post-recession high.
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