The Federal Reserve Bank of St. Louis' economic research team predicts there is almost no chance of the U.S. entering another recession in 2018.
The Fed estimates just a 4 percent chance of a 2018 recession in a report that comes shortly after the Fed's final meeting of 2017, in which "participants saw the outlook for economic activity as having remained strong or having strengthened since their previous meeting, in part reflecting a modest boost from the expected passage of the tax legislation," according to the account.
While the Fed is optimistic following the passing of the Republican tax bill, Morgan Stanley Wealth Management is less so, warning in a note that "while the tax cuts just enacted in the U.S. may lead to better growth in the short term, they may also bring forth the excesses we typically see before a recession — which is something credit markets figure out before equities," according to chief investment officer Mike Wilson.
"We think it will be much tougher to make money in 2018 and 2019 than in 2016 and 2017 as the risk of a recession and outright bear market comes closer," Wilson wrote. "Late-cycle dynamics have become even more evident."
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