|GDP||2% growth for the year, down from 2.4% in '15 More »|
|Jobs||195,000 new hires a month through '16 More »|
|Interest rates||10-year T-notes at 2.1% by end '16 More »|
|Inflation||2.4% for '16, up from 0.7% in '15 More »|
|Business spending||4% gain in '16, after drop in '15 More »|
|Energy||Crude oil trading at $40-$45/bbl. by July 4 More »|
|Housing||Construction of single-family homes up 15% this year More »|
|Retail sales||4.2% growth in '16, from 4.7% in '15 (excluding gasoline sales) More »|
|Trade deficit||Widening 4% in '16, after a 6.2% increase in '15 More »|
Drivers hitting the road for Memorial Day will see the highest gasoline prices of the year. But they’ll still be spending less than what they shelled out this time last year. The national average price of regular unleaded rose six cents this week to hit $2.27 per gallon. And odds are, the national average will reach about $2.35 per gallon by the holiday weekend. By comparison, prices averaged $2.75 during the Memorial Day holiday a year ago. Diesel prices, now averaging $2.26 per gallon, will also creep higher, reaching about $2.40 per gallon by late spring.
See Also: All Our Economic Outlooks
Crude oil rallied this week as traders bet that disruptions to oil output in Canada, Libya, Nigeria and elsewhere would cause the recent supply glut to shrink. U.S. benchmark West Texas Intermediate (WTI) hit $48 per barrel, its highest level so far in 2016. But the rally could prove short-lived. News reports indicate that oil production is restarting in western Canada in the wake of the massive wildfire that forced oil companies to slow or halt work as a precaution. Meanwhile in Africa, tankers recently picked up cargoes of crude from Libya and Nigeria after terrorist attacks and political turmoil had interrupted shipments.
The market will undoubtedly remain volatile and unpredictable in the short run. But if supplies continue to rebound, crude prices are going to be hard-pressed to hang on to their recent gains. Global stockpiles remain at high levels, so a return of additional barrels to the market could aggravate the oversupply situation. We look for WTI to retreat slightly by July 4, returning to a trading range of $40 to $45 per barrel.
Natural gas prices remain docile, with the benchmark gas futures contract last trading at $2.04 per million British thermal units. We expect prices to stay near $2 until the weather warms up significantly and power plants start burning more gas to generate electricity. Several long-term weather outlooks are calling for a warmer-than-normal summer, so don’t be surprised if natural gas trends higher in a few months.