By Isaac Cohen*
The last weekly insight from the Institute of International Finance, the global association of the financial industry with close to 500 members from 70 countries, finds “optimism curbed,” because markets see less clarity ahead.
True, markets reacted positively since the election of President Donald Trump, with stocks up 5 percent since January. Also, consumer confidence in March, measured by the Conference Board, reached the highest level since December 2000.
However, at the end of the first quarter, yearly economic growth is expected to remain at around 2 percent, the moderate rate at which the US economy has expanded since end of the Great Recession. Additionally, some short-term indicators confirm the moderation of optimism. The Dow Jones Industrial Average has fallen on the last nine trading days, while the Institute of International Finance sees a marked slowdown in bank lending to businesses.
Chief United States Economist at Morgan Stanley Ellen Zentner, widely quoted in several media, said there is a discrepancy between what she calls “soft data,” such as consumer confidence and “hard data,” such as retail sales or bank lending.
Still, Harvard Professor Robert J. Barro, in an op-ed in the Wall Street Journal, says the new government can still generate 3 to 4 percent growth, by cutting taxes, reduce regulations, building infrastructure and avoiding, all less credible measures after the repeal of the health care bill.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media. Former Director, UNECLAC Washington.