Analysts at Barclays Capital expect U.S. economic growth to pick up in the second half of this year because of the positive impact of the government’s fiscal stimulus package and the Federal Reserve’s aggressive easing of monetary policy. The forecast was part of Barclays Capital’s quarterly economic report, “Global Outlook: Implications for Financial Markets,” which was released today.
“On our projections, the U.S. economy will grow 0.5% annualized in the first half, but pick up notably in the second half 2008,” the Barclays analysts wrote.
They cited four factors for the upbeat forecast: monetary and fiscal stimulus, as they expected the Fed to lower the 2.25% fed funds rate by another 50 basis points this year, “but there could yet be more (easing),” while Washington’s $150 billion fiscal stimulus package should quickly boost growth; the weak dollar should boost exports; the non-financial business sector should stabilize, with inventories and investments already low; and the gradual easing of the drag from housing.
The report also expected steady global economic growth; a further surge in commodity prices; and lasting credit concerns continuing “to plague the global economy.”
