Investors may get little time to enjoy the accelerated growth in an increasing number of forecasts, with one school of thought envisioning the Federal Reserve turning out the lights just as the party is getting started.
Goldman Sachs turned some heads over the weekend when it issued 2018 projections that see the economy growing well ahead of trend, the unemployment rate hitting its lowest level since 1969 — and the U.S. central bank dropping the hammer on four interest rate hikes.
The forecast comes from a belief that the Fed will get more comfortable with inflation rising towards its 2 percent target and less so with an overheating labor market that finally will begin to show signs of wage acceleration.
"With robust growth momentum and no striking imbalances in the economy, near-term recession risk still looks fairly limited," Jan Hatzius, Goldman's chief economist, said in a note. "But the strength is becoming 'too much of a good thing' and containing further overheating will become a more urgent priority in 2018 and beyond."