As the summer winds down, the outlook for Fed policy, the North Korea crisis, and questions surrounding U.S. tax reform remain the chief areas of uncertainty for the global macro picture. Global growth indicators remained strong and markets returned to a risk-on appetite during July and August. August was also interesting in that risk assets such as stocks performed well, but gold and long-term Treasuries did even better. One interpretation is that a solid global economy is supporting risky asset prices, but nervousness over North Korea, and perhaps the U.S. debt ceiling expiration, prompted investors to bid for Treasuries.

An active hurricane season has caused some concern about impact on gross domestic product (GDP). Hurricane Harvey struck Texas’s oil-refining infrastructure in the Houston area, while Irma struck Florida. We estimated Harvey’s approximate GDP impact prior to the arrival of Irma, which is more difficult to estimate cleanly, but will certainly be negative. We continue to assess Irma’s effects, but as with other past hurricane events, the economic impact is temporary. The reduction in third-quarter GDP should be more than offset by a bigger recovery bounce that will be spread over the fourth quarter of 2017 and the first quarter of 2018.


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As the summer winds down, the outlook for Fed policy, the North Korea crisis, and the questions surrounding U.S. tax reform remain the chief areas of uncertainty for the global macro picture.