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Can we explain the expected growth gap between the United States and the euro zone?
The growth prospects shown by economic ( cyclical ) surveys are far more positive in the United States than in the euro zone. And yet, the United States is apparently nearer to the end of the expansion period than the euro zone, look ing at the unemployment rates. How then can we explain why expected growth is far higher in the United States than in the euro zone? Demand for goods and services will effectively increase faster in the United States than in the euro zone, mainly due to the effects of the tax reform and expansionary fiscal policy in the United States; But could this stronger demand in the United States be transformed into increased production? This would require either an upturn in productivity or in the participation rate, both of which seem unlikely; We should therefore anticipate the possibility that the growth forecasts of the surveys are over-optimistic in the United States, due to a confusion between the demand side and the supply side of the goods and services market.
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Natixis
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Patrick Artus
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