Global Macro Views

A challenge for a global citizen is to find a corner of the world that seems less risky now than a few years ago. Among the seemingly intractable challenges are an emboldened nuclear power in North Korea with unclear ambitions, contentious negotiations on trade in North America, and increased bickering among world leaders. In the US, natural disasters have harmed our citizens, disrupted business activity, and destroyed some of the nation’s capital. The imprint of Hurricanes Harvey and Irma will also be felt on economic releases for some months to come. As for manmade storms, the president is seemingly as much at odds with Republican leaders on Capitol Hill as Russian ones at times. In Europe, in contrast, the German elections should be resolved uneventfully and there is a chance President Macron of France maneuvers meaningful structural reform of labor markets through the National Assembly. Extending progress in the form of great coordination across the European Union, however, is a much bigger ask.

In advanced economies, real GDP growth has mostly been revised up, with economic expansion more in sync than is the norm. Indeed, across the members of the G-7, the four-quarter growth of real GDP is now as tightly clustered as it has ever been in this century.

In the US, history reads better than it lived, with revisions to real GDP boosting first-half growth and making attainable the expectation of Federal Reserve officials of a 2-1/4 percent outcome for the year as a whole. If so, 2017 extends the trend of the past seven years of expansion of economic activity centered at around 2 percent. The G-7 as a whole is tracking at that pace as well, most likely because financial conditions have gotten even more accommodative in the US and stayed so in Europe.

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