U.S. on a moderate growth trajectory - Scotabank

Analystst at Scotiabank explained that continuing gains in consumer spending and housing activity are helping to keep the U.S. on a moderate growth trajectory.

Key Quotes:

"Relatively buoyant increases in jobs and wages, combined with historically low interest rates and prices at the gasoline pumps, are underpinning the purchasing power of Americans.

U.S. business investment, in contrast, has lost considerable momentum, although the retrenchment in capital expenditures attributable to the lingering slump in energy prices is abating. However, there are increasing downside risks to industrial activity, highlighted by slumping durable goods orders and the likelihood of further weakness in exports associated with the downgraded expectations for global growth.

The Federal Reserve will likely keep policy on hold this year, and slow the pace of interest rate normalization next year owing to the increased uncertainty and volatile financial market conditions in the aftermath of the U.K.’s Brexit vote. This uncertainty is already contributing to strong ‘safe-haven’ flows into the U.S. dollar, which will weigh on U.S. growth and inflation prospects."