The US economy is set to enjoy 3.7 percent growth during the second half of 2018. High levels of consumer and business confidence, along with continued fiscal stimulus effects, are driving strong spending and investment growth. Profits are also rising because of the tax cuts and the robust demand environment. 2019 will bring new headwinds as higher Federal Reserve policy rates translate into increased capital costs for both home buyers and firms, slowing the housing market and investment activity. A weaker global environment, particularly with increased risks coming from emerging markets, could also slow US growth in 2019. Productivity growth, which could be enhanced by increased 2018 investment in equipment, software, and R&D, will have to strengthen considerably or growth will moderate throughout 2019.