Jeffrey Viksjo, CFA

Vanguard’s Global Chief Economist Joe Davis believes the odds are high that the U.S. will avoid a recession next year, but believes investors are already pricing in a possible “growth scare” where growth decelerates more than expected. Davis cites the ongoing “Trade War”, diminishing fiscal policy stimulus, and the Fed, as potential culprits. In terms of interest rates, Davis believes the burden of proof is high for the Fed not to raise rates, and expects the Fed to raise in December and two more times next year (stopping at 3%). While uncertain as to its outcome, Davis believes the “Trade War” continues to be the largest risk factor for the economy, potentially causing the widest disparity in actual growth versus current forecasts.

Source: Bloomberg

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