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The economic expansion is projected to continue in 2018 and 2019. Buoyant asset prices and strong business and consumer confidence will support consumption and investment growth. The impact of slowing employment growth on consumption will be partly offset by wage growth acceleration as the labour market tightens further.
Fiscal policy is projected to become more supportive in 2018 as measures are assumed to be introduced lowering tax rates on corporate and personal income and stimulating investment and consumption. At a time when unemployment is at its lowest level since 2000, the assumed fiscal boost will also contribute to further wage growth, thereby providing the conditions for monetary policy to continue normalising gradually. Policies to help people return to employment would underpin stronger growth of activity while reducing inequalities. Deregulation and tax reform would support stronger investment and help lift productivity.
Financial stability has strengthened since the crisis and regulatory oversight has improved considerably, but vulnerabilities have emerged during the extended period of exceptional monetary easing. In particular, asset prices are elevated and high leverage exposes the corporate sector to shocks. House prices exceed pre-crisis levels in several big cities. Although regulatory oversight imposes a burden on some financial firms, reforms to minimise these burdens need to ensure that vulnerabilities are not allowed to build up further.
Economic Survey of the United States (survey page)