Financial Outlook with John Briggs | NatWest
On Wednesday 7 February, The BSCC had the pleasure of hosting the Financial Outlook webinar in collaboration with NatWest. The distinguished speakers, John Briggs, Global Head of Economics and Market Strategy, and Kevin Cummins, Chief US Economist at NatWest, graciously shared their insights into the future of the economy.
Some key insights takeaways during the evening were:
- Resilience of the US Economy in the Previous Year
The US experienced growth rates surpassing the trend, with Q4 GDP exceeding expectations, accompanied by robust employment reports.
- Faster-than-expected decline in US Inflation
The expectation is that inflation will return to preferred levels in spring, paving the way for a potential policy rate cut as early as May. With the Federal Reserve targeting a soft landing, the insights from NatWest suggest a mild recession compared to historical standards, providing reassurance about the economic outlook.
- Loaming effects of the COVID-19 pandemic
Stimulus packages aimed at parring the COVID–19 pandemic have upheld the US economy for some time. As roughly 70% of US GDP is accounted for by consumption, the large stimulus packages have had a paramount effect. Furthermore, daily withholding employment-based tax data suggest a slowing in labour income. The stock of excess savings is also shrinking. The remaining cash in the system is mostly held by higher-income households with a lower marginal propensity to spend it.
- Restrictive credit is dragging output growth
Tighter credit serves as a drag on output growth by forcing consumers and businesses to reconsider spending, which would have been undertaken when credit was cheaper and more easily available. As business spending leads to consumer spending, a prolonged credit tightening risks deepening the recession.
- The US – Election Dynamics
It is anticipated that Biden and Trump will once again emerge as the primary candidates in the upcoming US election. Early polls suggest Trump holds a lead over Biden, but it is premature to draw definitive conclusions about the extent of this lead. A record number of Americans identify as politically independent, adding further uncertainty to the election outcome. With Biden, the incumbent, facing challenges in boosting the US economy and formulating clear immigration policies, the outlook for Trump in 2024 appears more favourable than in 2020. Regardless of the outcome, a split government is likely, leading to legislative gridlock and minimal changes in the fiscal framework.
The BSCC extends sincere gratitude to John Briggs and Kevin Cummins for providing insightful perspectives on the economic and political landscape. Special thanks to NatWest for enabling this event, and appreciation to all attendees for contributing to engaging discussions, making it an overall enriching evening.
Follow the link below to rewatch the seminar.