Growth in the US tailed off towards the end of 2015, with the impact of weaker global economic activity, and the strength of the US dollar impacting growth. In this video from April 2016, Henk Potts, Director of Global Research and Investments for Barclays, gives his views on what lies ahead for the US.

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Video transcript

“Growth in the US tailed off towards the end of last year – no real surprise, given the fact we saw the impact of weaker economic activity around the world.

“Alongside that , we saw the strength of the US dollar impacting growth, and inventory levels being run down by businesses.

“The good news is the US consumer continues to spend. Unemployment has been falling and consumer confidence is up at multi-year highs. We’ve seen some robust retail sales numbers.

“Productivity is improving – if you look at the order books of manufacturing and non-manufacturing companies – they look very healthy indeed. We expect the US economy to grow at 2.2% this year, rising up to 2.5% in 2017.

“We still think there is pressure on the Federal Reserve this year, despite in the short term the lack of inflation and some market volatility.

“So, perhaps on hold for longer than anticipated, we’re still looking at two rate hikes in 2016: one in June, one in December, with Fed funds finishing the year between 0.75-1.0%.

“One of the most significant dates during the rest of 2016 will be the US presidential election. History tells us markets don’t really mind which party controls the White House.

“Perhaps the founding fathers had something, because markets do like it when one party controls Congress and another controls the White House.
“If you look at the data, Markets have performed best in the third year of the Presidential cycle.

It’s quite easy to find the winners when it comes to Presidential elections – they tend to be the PR agencies, advertising agencies and broadcasters”

Henk Potts, Director of Global Research and Investments, Barclays.

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