Economic growth expected to slow significantly in 2019

Chief U.S. Economist Ellen Zentner of Morgan Stanley wins Lawrence R. Klein Award for forecasting accuracy.


MEDIA NOTE: Journalists can RSVP to attend the economic-forecasting-accuracy event in New York on Tuesday Oct. 16.

TEMPE, AZ (Sept. 19, 2018) — How will policy and trade impact the economy going into 2019? What does the future hold for growth, inflation, and interest rates? Following four Federal Reserve interest rate hikes in 2018 to cool the economy, Ellen Zentner predicts two additional Fed hikes in the first half of 2019.

Ellen Zentner

The economist with the most accurate forecasts — four years in a row — will deliver her predictions at an event in New York City on Oct. 16, 2018. Zentner will be honored with the Lawrence R. Klein Award, regarded as one of the best-known and longest-standing achievements in the field.

Zentner, chief U.S. economist and a managing director at Morgan Stanley, has had the most accurate economic forecasts among the nation's top economists for the years 2014 through 2017.

“Given the growing complexities of today’s economic landscape, I am honored to receive this prestigious award for accuracy in forecasting. I share this with my team at Morgan Stanley, whose hard work and dedication help produce the thoughtful, in-depth, and collaborative research our clients expect,” said Zentner.

Zentner demonstrated amazing consistency, outshining some 50 competitors for this year’s award, which is judged and sponsored by the W. P. Carey School of Business at Arizona State University. The Blue Chip Economic Indicators newsletter is the source of the forecasts used to select the winner.

“During the 2014-2017 period, GDP and CPI growth rates were bouncing around while unemployment was on a steady downward path,” said economics Professor Dennis Hoffman, director of the L. William Seidman Research Institute at Arizona State University’s W. P. Carey School of Business.

“Ellen was the panelist that foresaw these gyrations most accurately. She caught the 2015 uptick in GDP and then the slower growth in the following year, and she was spot-on with the CPI and the unemployment rate. Her overall forecast error figures were the lowest we have seen in some years.”

With a keen eye toward early identifications of market-moving trends, Zentner has been named to the “Bloomberg Best” list of top forecasters. She has more than 20 years of experience as a Fed watcher and markets-based economist.

Zentner joined Morgan Stanley in 2013 from Nomura Securities International where she served as Senior Economist for fixed income. Previously, she was senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. and senior economist at the Texas State Comptroller.

Zentner serves on various economic and academic advisory panels.

She holds a bachelor of business administration and a master’s degree in economics from the University of Colorado. Zentner and her husband are avid fly fishers and live in Bronx, New York.

Tom Keene of Bloomberg Radio and TV, a long-time colleague and friend, will present Zentner with the award.

At the ceremony, Zentner will deliver her 2019 economic forecast, including these predictions:

  • Growth is expected to slow significantly in 2019, as the impulse from fiscal policy fades and trade acts as a restraint on economic activity.
  • Though direct government spending continues to contribute positively to growth, the stimulus from tax policy is mostly absorbed in 2018.
  • Growth in business investment moderates in 2019, but still helps to drive higher productivity.
  • Household consumption holds up well through early 2019, supported by higher disposable income and tax refunds. A higher savings cushion alongside a largely fixed-rate household balance sheet remain cycle extenders.
  • Job growth puts further downward pressure on the unemployment rate, which falls to 3.5 percent in 2019.
  • A combination of temporary factors that had been depressing core inflation have now abated, and core inflation should remain comfortably at or above the Fed’s 2 percent goal.
  • Following four hikes in 2018, the Fed hikes twice in 2019, in March and June, where the hiking cycle will end.

Notable guests will attend the invitation-only award ceremony Oct. 16 at the University Club in New York, from 6 to 8 p.m. Journalists are asked to RSVP in advance of the event.

Guests include:

  • Amy Hillman, dean of ASU’s W. P. Carey School of Business
  • Dennis Hoffman, professor of economics and director of the L. William Seidman Research Institute at the W. P. Carey School of Business
  • Hannah Klein, professor of biochemistry, medicine, and pathology at the NYU School of Medicine
  • Randell Moore, editor emeritus of Blue Chip Economic Indicators

Established in 1976, Wolters Kluwer's Blue Chip Economic Indicators is synonymous with the latest in expert opinion on the future performance of the U.S. economy. Each month, the newsletter compiles the forecasts of 50 leading business economists for key indicators of economic growth.

About the W. P. Carey School of Business

The W. P. Carey School of Business at Arizona State University is one of the top-ranked business schools in the United States. The school is internationally regarded for its research productivity and its distinguished faculty members, including a Nobel Prize winner. Students come from more than 100 countries and include more than 50 National Merit Scholars. Visit www.wpcarey.asu.edu.

About Morgan Stanley

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing investment banking, securities, wealth management, and investment management services. With offices in more than 41 countries, the firm's employees serve clients worldwide including corporations, governments, institutions, and individuals. For more information about Morgan Stanley, please visit www.morganstanley.com.

For more information / media contacts:
Rebecca Ferriter, W. P. Carey School of Business
Rebecca.Ferriter@asu.edu
310-871-9041

Paige Mandy
Morgan Stanley
Paige.Mandy@morganstanley.com
212-761-3226