Country Economic Forecasts > United States

The US economy will likely only grow by 1.5% in 2016 the slowest pace since the Great Recession. However, while the headline figure may appear concerning, we suggest that it continues to reflect a dual-track economy where consumers are still spending at a steady pace, but businesses remain hesitant. Strong income gains, led by solid employment and firming wage growth, should support consumer outlays while a strong dollar, weak global growth, depressed energy activity and rising uncertainty about the presidential election will constrain business investment and exports. Following downward revisions to H1 growth, we have lowered our 2016 GDP growth forecast to 1.5%. We see the economy growing 2.6% in H2 supported in part by solid consumer outlays and an inventory bounce-back in Q3. We believe the Fed will raise interest rates only once in 2016 most likely in September followed by two rate hikes in 2017.