‘Substantial’ US economic slowdown on horizon

A leading investment bank has warned the US economy is heading for a ‘substantial’ slowdown in 2018.

Natixis says there is a limit to how fast the economy can grow, and next year could see it run out of steam.

Wage growth slowing

“The US economy will in all likelihood slow down substantially – there is a limit to the rise in the participation rate and the employment rate; real wages are slowing down," said Natixis chief economist Patrick Artus.

"Investors should therefore prepare for the consequences." Natixis is a Paris-based investment bank based with $950bn assets under management.

Natixis chief economist Patrick Artus believes a ‘downward correction’ is likely Photo: Natixis

US banks bullish

M. Artus said the level of corporate investment was “abnormally high” and a downward correction was likely.

He said the result would be a market sell-off, a rise in interest rates and a depreciation in the dollar.

In contrast, US investment banks have forecast a 2.5% growth in US GDP in the third-quarter results due out on Friday, according to a consensus estimate by Thomson Reuters.