Goldman Sachs: It’s Going to Be a Great New Year, Economy to Roar in 2018

economy to roar in 2018

According to Goldman Sachs analyst Charles Himmelberg, if you’ve thought that 2017 was good, just wait for 2018.

“2017 is shaping up to be the first year of the expansion in which growth surprises to the upside. We expect 2018 to deliver more of the same,”

As per  Mr. Charles Himmelberg and his team’s projections, the global economy will grow by 4 percent in terms of GDP next year, following the trend that has already picked steam this year in the US, Germany and Japan. EU’s largest and strongest economy, Germany respectively, did unexpectedly good in the 3rd quarter of 2017, while Japan’s economy also grew for 7 consecutive quarters.

Moreover, the United States saw a 3 percent economic growth in the 3rd quarter of 2017. Charles Himmelberg and his analysts have great expectations for 2018 for a number of reasons, including an easing of financial conditions, the aforementioned strong growth momentum, while the global monetary policy is still, let me quote, “highly accommodative by historical standards”. Goldman Sachs also expects for the Federal Reserve to continue with the fiscal stimulus in the United States.

Stocks did great all around the world. For example, the S&P 500 in the United States grew by more than 14% in 2017, Germany’s DAX is up 13% and Japan’s NIKKEI 225 also has risen 17.2%. Charles Himmelberg added:

“Heading into 2018, one of the top policy risks in focus for investors is the passage of US tax reform. A second policy risk which has fallen off of radar screens, but which is still active, in our opinion, is US trade policy,”

Even if Goldman Sachs gives tax reform an 80% chance to get passed through Congress in early 2018, the analyst added:

“If tax legislation fails to pass, it would be the second major legislative failure during President Trump’s first year in office.As goes tax reform, so may go NAFTA.”

Moreover, according to a research note released on Friday by Jan Hatzius, Goldman Sachs’ Chief Economist, due to the strong momentum of the US economy, which will boost both inflation and wages, it is expected for the Federal Reserve to raise interest rates 4 times next year.

“Our projections would imply an evolution over the current cycle from the weakest labor market in postwar U.S. history to one of the tightest. We expect that a tight labor market and a more normal inflation picture will lead the Fed to deliver four hikes next year.”