Dewan explained that the three outlooks for the US and global economies offered by Vanguard should help inform Canadian advisors. The first outcome he sees is a US economy that rests around two per cent growth and inflation over the next decade. His view, however, is that there is only a 10-15 per cent chance of that occurring.
While the ongoing issues with US debt and aging demographics may be set to create that period of slower growth and higher inflation, Vanguard’s base case is that the productivity gains promised by AI — should they materialize — ought to result in a higher US growth rate, of around 3.1 per cent, with bond yields staying around their current levels and inflation coming down.
The third and final case that Vanguard sees is a risk that debt and demographics become an anchor on growth. Bond returns would come via coupon clipping rather than price changes, inflation and…
