Adjusting for the expected 2 percent inflation rate in 2018, however, the real wage increase would be only 1 percent-down from last year’s 1.9 percent. In the U.S., Korn Ferry, the executive search and recruiting firm, predicts an average 3 percent pay increase, the same as for 2017. In the U.S., wage growth remains anemic despite an unemployment rate of just 4.1 percent. economy to experience stronger GDP growth for the first half of 2018, or perhaps through the midterm elections, on the order of 2.5 to 3 percent, followed by a slowdown that will depend on the size and pace of future interest rate hikes-a big question mark as Janet Yellen’s term as Federal Reserve chair expires next month. And with the recent passage of the Republican tax reform bill providing additional economic stimulus, that process is likely to be accelerated and require action from the Federal Reserve to raise rates and prevent excessive overheating and bigger recession risks down the road. The question is no longer whether output will overshoot potential, but by how much. However, given the already tight labor market, spare capacity is diminishing rapidly. According to the latest forecasts from the Federal Reserve in early December, GDP growth is expected to remain in the range of 2 to 3 percent with continuing low unemployment and relatively little inflation it’s what economists call the “ Goldilocks” economy-not too hot and not too cold. economic outlook is healthy, according to the key economic indicators. Indeed, for the first time since 2010, the world economy is outperforming most predictions across most advanced and emerging economies. What’s your forecast for the 2018 economy? Goldman Sachs predicts that the global economy will expand by 4 percent in 2018, up from 3.7 percent in 2017. “For many economists,” she says, “the question is not whether the bubble will burst but when.” Here’s what else she foresees for the economy in the new year. This story is part of our multi-part series looking at some of the big stories and bright ideas primed to make headlines in 2018.īitcoin’s bubble could burst in 2018, according to Northeastern associate professor Alicia Sasser Modestino, a labor market expert in the College of Social Sciences and Humanities.
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