Citi's Global and US Economic Forecasts - what the risks are

In late February,Citigroup issued its global economic outlook.It cut its global expansion forecast from 2.7% to 2.5%.Global prospects are worsening further,with deterioration across advanced economies alongside previous weakness in the emerging markets,Citi's research note said.Britain's upcoming vote on whether to leave the eurozone is a key extra near term global risk that would hurt both the UK and EU economies;while more policy easing from the European Central Bank and Bank of Japan will provide only limited stimulus.*
On 15 April,Citi released its US forecast.Our US outlook has little potential to be surprised on the upside,but the risks are very evident on the downside,said William Lee,head of North American Economics.Risk is from looming uncertainty as to when the Fed will make rate hikes,as well as many important political events here and abroad scheduled in the next few months.Recently reviewed and incoming data imply GDP will grow by 0.9% in Q1 and 1.7% for the year.
Despite such tepid growth prospects,we project a slow decline in the unemployment rate to 4.6% by end-2016,and 4.5% by end-2017.We continue to believe there will be only one rate increase this year-likely in September-unless developments stir financial markets and/or dampen further growth prospects.In that event,December or a later meeting would be a more likely date for an increase,Mr.Lee noted.*
Citigroup (C)

Economy To Hold Steady

According to the National Association of Business Economists,the U.S. economy is expected to remain on an even keel in 2007.While personal spending is expected to rise slightly,Gross Domestic Product,the value of goods and services,will fall slightly.Corporate profits will drop sharply,but the Federal Reserve will hold interest rates steady until 2008,when it will make one .25 cut.Nonetheless,any of a number of wild cards,such as war with Iran or a bad hurricane season,could upset the equilibrium forseen by these economists.