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Weekly Economic Insights - 24 September 2018

Macro Highlights - 9/26/2018

Highlights of the week

Economist insights: New increase in trade tariffs by the US, drop in eurozone PMIs, and the SNB has reinforced the dovish tone of its communication

  • The US will apply additional trade tariffs of 10% on USD200 billion in Chinese imports from 24 September and of 25% from 1 January 2019, Beijing has not been able to retaliate equally
  • In the eurozone, the Composite PMI has dropped and confirms our scenario of a deceleration in economic activity and lower growth in exports in 2018
  • In Switzerland, by sharply revising down its inflation forecasts for 2020, the SNB reinforces the accommodative bias of its communication

Focus United States: US consumption limited by household uncertainty

  • The stable consumption growth in 2018 is explained by the sluggishness in disposable income, government transfers and the net worth of households
  • However, the relationship between consumption and these three determining factors has deteriorated since 2012. The Fed highlights the greater uncertainty of households that could be weighing on consumer spending
  • This analysis underpins our forecasts according to which growth in consumption would remain moderate until the end of the year, at 2.7% on average in 2018, and inflationary pressure would remain contained

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