Overall M&A Market Commentary
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The U.S. economy continues to show strong momentum with 2Q18 GDP growth recorded at 4.2%. The Blue Chip consensus estimate for 3Q18 GDP growth of 3.3% and the Atlanta Fed prediction of 4.2% 3Q growth seems to support the notion that this momentum will continue. The new North American trade deal, the United States Mexico Canada Agreement (“USMCA”), showed progress on trade and signaled that the North American trade partners will work together to improve the trade situation with China. So far the effects of the tariff actions with China have yet to affect the strong economy. While some companies have seen a negative effect from the trade dispute, it is important to consider that the majority of U.S. companies do not have large exposure to China. Plans are being made for a summit in November to see if the leaders of the U.S. and China can make progress on trade and other issues.
Consumers and business owners are very optimistic. “This is the longest streak of small business optimism in history, evidence that tax cuts and regulatory rollbacks are paying off for the economy as a whole,” said NFIB President and CEO Juanita D. Duggan. “Our members say that business is booming and prospects continue to look bright.” Recent comments by Fed Chairman Powell indicated that he believes that the economy is strong enough to handle a normalization of interest rates, so the Fed rate increases will continue. The momentum produced by the corporate tax rate reduction, solid consumer spending, more investment in equipment and improved industrial production is expected to provide a strong economy into 2019.
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