ACTIAM Monthly

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Last month the US shutdown came to an end after five weeks. The political turning point was triggered when the closure of a runway at LaGuardia airport (New York) due to a shortage of staff attracted broad media coverage. This shutdown cost roughly half a per cent of economic growth. Though still only a temporary respite, we do not foresee a new shutdown. President Trump has already suffered too much loss of face and his popularity ratings slumped during the shutdown. Trump was held largely to blame for the closure of public services. The Congressional Budget Office expects a total negative effect of U$ 11 billion in the first quarter. After the catch-up effect, the US economy will be left with U$ 3 billion of economic damage. The underlying economic numbers were good. The provisional purchasing manager data, known as the Markit PMI, pointed to an unforeseen upturn. Consumers have become more somber, with the consumer expectation index showing a particularly sharp drop. Nevertheless, house sales actually grew strongly in January. The picture, as yet, is mixed. The Fed moderated its tone on interest rates. In late 2018, investors still feared that Powell would continue to relentlessly hike rates. The last interest rate meeting showed, however, that the Fed was more concerned about the disappointing economic outlook.