A sustained global economic expansion is expected, with a broad pattern of growth in both developed and emerging countries, according to BNY Mellon chief economist Richard Hoey as outlined in his most recent economic update.
"From a longer-term perspective, emerging countries have a higher trend growth rate than developed countries, due to continued diffusion of modern technologies and the long-term uptrend in the productivity of their labor force," said Hoey. "Cyclically, however, the countries with the best prospects for a near-term improvement in economic growth are the developed countries, as they recover from depressed levels of economic activity in response to easy monetary policy."
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Hoey expects the pace of expansion in the U.S. to accelerate from approximately 2% in the last four years to 3% in 2014, 2015 and 2016.
"For U.S. economic growth, we expect a ‘three for three’ pattern," Hoey said. "The U.S. economy has been experiencing a fiscal drag from the tax hike on upper-income taxpayers, the Social Security tax hike, and the sequester spending cuts. This large fiscal tightening is now cresting. The U.S. faces a reduced fiscal drag in 2014 and beyond. We believe that the U.S. economy is near an inflection point to a somewhat faster growth rate. All the stimulative monetary policy of the past should continue to support expansion in the interest-sensitive sectors, including housing, autos and capital spending."
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