US economy set for faster growth

The US economy has reached an inflection point and it is set for faster growth until 2017, according to BNY Mellon chief economist Richard Hoey.

Hoey said that growth should run at 3.5% to 4% for the global economy over the next four to eight quarters, and close to 3% for the US economy. He added that downward revisions to growth in the first part of 2014 have occurred just before an inflection point leading to a faster pace of growth than in the last few years. Consequently, Hoey said that US real growth has averaged close to 2% in the last five years, and will increase to an average of 3% in a prolonged economic expansion which will last until 2017. He said that the Fed funds rate will gradually rise in late 2015 and 2016, followed by a more aggressive monetary tightening in 2017 or 2018 after the 2016 presidential election.

Elsewhere, Hoey said he expected moderate but sustained economic expansion over the next several years in Europe and in the 1% to 1.5% growth range in 2014. In China, Hoey expects an orderly deceleration of trend growth rather than a major financial crisis and hard landing.