Economic growth may cool this quarter to a 1.6% annualized rate, as the $85 billion in automatic across-the- board federal spending cuts, or sequestration, that began in March start to ripple through the economy, according to the median forecast of economists in a separate Bloomberg survey conducted in May. Growth is projected to accelerate in the last six months of the year.
A stronger U.S. currency will make American exports less attractive to overseas buyers. The Dollar Index, used by IntercontinentalExchange Inc. to track the greenback against currencies of six U.S. trading partners, has climbed 4.5% from Feb. 1, this year’s low, through yesterday.
Even so, U.S. companies are benefiting from overseas demand in some parts of the world. Caterpillar Inc., the largest maker of construction and mining equipment, on May 20 said global retail sales fell at a slower pace in the three months through April from a year ago, as Latin America improved. Wet, cold weather hurt North American machine retail sales, the Peoria, Illinois-based company said.
The Organization for Economic Cooperation and Development in May forecast that global economic growth will accelerate in 2014, with the U.S. and Japan continuing to outpace the euro area. The euro-area economy will shrink in 2013 before expanding next year, it said. China, which isn’t a member of the OECD, will expand 8.4% in 2014 after growing 7.8% this year, according to the report.