- Sam Bullard, a senior economist at Wells Fargo Securities LLC
A former CEO of PIMCO Mohamed A. El-Erian considers that a financial support for Ukraine can threated American stocks, resulting in a more serious consequences to the economy. Moreover, last week's report showed the economy was not able to meet its GDP target. What is currently happening with the world's largest economy is something similar to a recovery from a serious illness. At first, doctors believe the patient start to return to normal, however, later the patient can suffer from a permanent damage that can have a devastating effect on the health.
While economy is still expanding at a stable pace, further slowdown can be an alarming sing. Stronger growth makes both public and private goals more achievable for the government, while slower growth can become a drag on living standards. It will make harder to reduce the budget without any tax hikes, while also pose a threat to the inflation. All this makes it more complicated for the Fed to continue tightening its monetary policy. While Janet Yellen sounded very confident last time, hints about the upcoming rate hike were not able to provide a significant boost to the greenback, with EUR/USD still trading around 1.38. Additionally, experts are not univocal in their assessments, as Moody's Analytics believe the GDP will accelerate to 3% this year, economists from Morgan Stanley lowered their forecasts to 2% from 2.5% expected earlier.
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