United States (US) GDP Growth Forecast

Weak start but positioned for rebound.

While the advance estimate of real US GDP growth in Q1 2017 stood at a paltry 0.7%, the Federal Open Market Committee’s statement released after its 2–3 May meeting echoed the view that the first-quarter weakness was “transitory,” indicating the Fed is on track for two more rate hikes this year. Real GDP growth marked the weakest in three years as consumer spending stalled and inventory accumulation slowed sharply. IHS Markit forecasts that real US GDP growth will rebound sharply in the second quarter to 3.4%, led by consumer spending. Our long-term forecast assumes the Federal Reserve will adjust monetary policy to keep inflation near a 2% target.

To learn more, visit the US Economic Service.

Key US GDP Forecast Drivers

  • Exports and imports have both picked up pace: Exports, in response to the fading effects of the strong dollar, imports in response to stronger domestic demand
  • Housing starts are higher in the near term, elevated shares of new homes offered for sale and sold before construction starts pave the way for future building
  • Business fixed investment posted its strongest growth numbers over 13 quarters during the first quarter and key data suggest it has momentum
  • Consumer spending will remain an engine of projected US economic growth, supported by rising employment, disposable incomes and household wealth. Income tax cuts during 2018 will likely fuel accelerated spending growth and a hike in the personal saving rate.

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