US set for growth this year, says top analyst

The United States economy is poised to grow even without fiscal stimulus this year, although the risks are difficult to predict at this point.

That is the tip from Mr Thomas Lam, RHB Securities' chief G3 economist, who was yesterday named the world's third-best forecaster of the US economy.

The Singapore-based economist, who came fourth last year, was also recognised as last year's top forecaster of US price inflation for personal consumption expenditures - the US Federal Reserve's preferred measure of inflation.

"The task of forecasting the US economy, in an increasingly fluid global environment coupled with complex policy dynamics, has undoubtedly been challenging," Mr Lam noted, adding that forecasting is both a science and an art.

"I certainly hope I can contribute to a better understanding of the US from this part of the world."

He believes the US economy is set for growth this year, with lower unemployment and a continued recovery in inflation.

Many analysts expect President-elect Donald Trump to implement fiscal stimulus policies, which will provide a further boost.

Mr Lam cautions that US President-elect Donald Trump's trade and immigration policies may threaten growth.
Mr Lam cautions that US President-elect Donald Trump's trade and immigration policies may threaten growth.

"But there is still limited clarity on the size, timing and composition of fiscal stimulus at this time," Mr Lam said. "Besides, it is also impossible to pin down the potential threats from restrictive and detrimental policies on trade and immigration at this juncture."

While it is reasonable to assume a net boost to the US economy on average from fiscal policy, the lift might be less immediate, with potential dilution from other considerations, he added.

"I think the chatter surrounding the transition at the Federal Reserve - the prospective leadership change and the make-up of the board - could be equally, if not more, important."

Moreover, upcoming Brexit negotiations and elections in Europe are wild cards, he added.

A version of this article appeared in the print edition of The Straits Times on January 12, 2017, with the headline 'US set for growth this year, says top analyst'. Print Edition | Subscribe