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Will the global economy accelerate or stumble? Our Mid-Year Outlook
The global economy grew modestly in the ﬁrst half of 2015. But where will it go next?
In a policy-driven world, we see three possible paths. Path 1 Economic Stagnation Path 3 Moderate Growth Path 2 Secular Expansion
Path 1 Economic Stagnation U.S. rates rise quickly, restraining growth. Deﬂation takes over Europe and Japan. China weakens and global trade stagnates. Probability? Low
Path 2 Secular Expansion China experiences signiﬁcant consumption growth. The strong dollar and cheap energy fuel a U.S. boom. Europe and emerging markets see major structural reforms. Probability? Low
Path 3 Moderate Growth Growth is strong enough to support corporate earnings, but not enough to cause inﬂationary concerns. Probability? High
How do we get there?
Europe, China and the U.S. avoid policy mistakes.
Modest U.S. growth continues and credit conditions remain favorable.
Greece stays in the Eurozone.
Reforms stabilize and extend growth in China.
Our Mid-Year Outlook? Great Moderation 2.0 All signs point to continued moderate growth in the U.S. and abroad.
We believe: Stocks will keep outperforming bonds. Interest rates will stay low. Investors will pay up for scarce growth and income opportunities.
The Beat Goes On
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