The Macro Report | December 2017

The crystal ball: Implications for 2018

The acceleration in global growth witnessed in 2017 will continue well into 2018, but with significant changes in its components. While growth in the United States is expected to pick up, the eurozone and China face downside risks. The U.S. tax bill could create some upward momentum in growth in the world’s largest economy. The U.S. Federal Reserve will be the focus in 2018, especially in the first half as a new chairman takes office, new members join the Open Market Committee, and rate increases and balance sheet reduction are implemented at a faster pace. In fact, we believe one of the biggest risks to the outlook is the Fed moving too aggressively. And finally, the U.K.’s progress toward Brexit has not come without continued setbacks for Prime Minister Teresa May.

A hawkish Fed could interrupt growth

A hawkish Fed could interrupt growth

As global growth moderates, the Fed’s policies on interest rates and quantitative tightening may cast a shadow on risk appetite in 2018.

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Tax cuts trickle to GDP

Tax cuts trickle to GDP

Corporate tax cuts are likely to have a positive effect on economic growth, and could buoy the equity markets by raising after-tax earnings and corporate investment.

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Brexit negotiations stumble

Brexit negotiations stumble

The government’s exit strategy from the EU faces obstacles as divisions grow within May’s party, and as Parliament gets a final say in withdrawal.

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About the macro report

The Macro Report is written by members of Putnam’s Fixed Income team. With backgrounds in applied economics, currency and interest-rate analysis, and sovereign and local bond market dynamics, this group conducts macroeconomic research in support of Putnam’s global fixed-income strategies.

Michael Atkin, Portfolio Manager
Investing since 1988
Sovereign debt, global growth analysis

Albert Chan, CFA, Portfolio Manager
Interest-rate derivatives, government debt, risk analysis

Onsel Emre, PhD, Analyst
Inflation, risk analysis, global growth dynamics

Sterling Horne, Analyst
Politics and economics

Irina Solyanik, CFA, Analyst
Quantitive analysis, growth forecasting

Izzet Yildiz, PhD, Analyst
Labor market analysis, global growth dynamics