April 11, 2013

Pace of Global Economic Expansion Expected to Accelerate in 2014; U.S. Economic Growth Should Uptick in Late 2013, Says BNY Mellon's Richard Hoey

Two to Three Percent Transition in U.S. Growth Rate Expected After Labor Day

NEW YORK and LONDON, April 11, 2013 — The global economy will continue to expand this year, with a faster pace of growth close to 4% likely next year, according to BNY Mellon's Chief Economist Richard Hoey in his most recent Economic Update.  While Hoey thinks economic growth in the middle months of 2013 may be temporarily sluggish due to the final phase of the overall European recession and the impact of U.S. fiscal tightening, Hoey sees faster U.S. economic growth after Labor Day.*

"We expect a 'Labor Day inflection point' from the 2% growth rate of recent years to a new cyclical growth rate of 3% or more," says Hoey.  "This would be an important 'Two Percent to Three Percent Transition' in the growth rate of the U.S. economy," he continued.  "However, it is unlikely to occur until late 2013."

Other report findings include:

Global Stimulative Monetary Policy Will Continue – Hoey does not expect global stimulative monetary policy to end soon.  As monetary policy is easy worldwide, Hoey sees favorable prospects for growth improvement in China, Europe, Japan and the U.S. over the next year, as well as an improvement in confidence within the emerging countries.

Sluggish European Economic Recovery Expected – While Europe remains in a recession, Hoey believes that Europe will expand moderately in 2014 and does not expect a repeat broad financial crisis.  However, Hoey states that Europe does not yet have a plausible strategy to improve credit availability in the private sector of peripheral countries.

Positive on "Abenomics" in Japan – While the long-term outlook for Japan remains uncertain, Hoey believes that Japan's new aggressive monetary policies (Abenomics) are likely to contribute to positive economic growth in Japan and positive inflation in the next two years.

See http://www.bnymellon.com/foresight/update-video.html for Hoey's complete April 2013 Economic Update.

*Labor Day in the U.S. is Monday September 2, 2013.


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