August 8, 2019 – The outlook for the second half of 2019 has changed very little in Visa’s updated U.S. economic forecast. Thematically, uncertainty is king: about how many rate cuts to expect from the Federal Reserve (likely one more in September), the government’s policy on trade (not expected to be resolved anytime soon) and about global economic growth. These uncertainties will likely weigh on 2H2019 U.S. economic activity. Real gross domestic product (GDP) growth is expected to average 2 percent over the next two quarters on an annualized basis, with consumer spending the primary support to this growth. Business investment should bounce back later this year, but only slightly. Soft global growth will continue to keep a lid on business investment. With the release of the Q2 GDP data, 2018 GDP growth was revised lower to 2.9 percent.
The downward revisions to 2018 data also pulled down the full year 2019 forecast. Should the 2H2019 forecast pan out, headline GDP growth would rise 2.3 percent this year before downshifting to 2.0 percent in 2020. At this late stage of the business cycle, the only key support to growth is consumer spending, which could reverse course quickly if consumer confidence begins to erode. Modest consumer spending should continue in the months ahead, but the potential for downside risk to the consumption and GDP forecasts is growing.