- Ted Wieseman, economist for Morgan Stanley
For months economists were trying to predict whether the recent slump in the world's largest economy, caused by harsh winter, will be temporary or it will have a devastating effect on the economy. Some believe the economy has contracted in the first quarter, as Q1 growth is likely to be revised to the downside. It means the growth will not be able to hit the 3% pace this year. In fact, it can be even less than the 2.6% expansion recorded in 2013. Economists from Morgan Stanley claim for the 3% growth in the second half of the year, saying the recent slump has just delayed the prosperity by one quarter, not derailed it.
Amid main drivers they name reduced fiscal drag, higher consumer wealth, stronger demand for property, the ongoing improvement in consumers' debt load and stronger demand for capital investment. All indicators, but mortgages and credit availability are expected to return to the pre-crisis levels. Amid main challenges experts cited housing market and capital spending by companies. While the first problem was entirely caused by weather, the second is still a big issue that regulators have to address. Weak spending hurts not only current growth rates, but also make long-term targets less optimistic. The latest report showed the amount of capital available per worker fell for the third consecutive year. Nevertheless, these projections are adding to signs we can see stronger Dollar in the second half of this year.
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