|GDP||2% growth for the year, down from 2.4% in '15 More »|
|Jobs||Hiring slowing to 150,000/month by end '16 More »|
|Interest rates||10-year T-notes at 1.8% by end '16 More »|
|Inflation||2.1% 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||Prices up 5% on average in major metro areas More »|
|Retail sales||4% growth in '16, compared with 4.8% in '15 (excluding gas) More »|
|Trade deficit||Widening 4% in '16, after a 6.2% increase in '15 More »|
Brexit just tanked the oil market. Along with stocks and most other risky assets, crude oil prices slumped to end the week after British voters surprised financial markets by opting out of the European Union. That sent the dollar soaring against other currencies and took a big bite out of dollar-denominated oil prices. Benchmark West Texas Intermediate fell to less than $48 per barrel after recently topping $50 on optimism that the U.K. would vote against Brexit.
See Also: All Our Economic Outlooks
Crude oil prices will probably struggle to gain much traction in the near term. We look for WTI to trade from $40 to $45 per barrel by early autumn, although there will be plenty of price volatility between now and then. Worldwide inventories of stored oil remain high and most exporters are pumping as fast as they can. That should offset continuing modest production declines here in the U.S.
Prices at the gas pump should ease a bit. After falling by 3 cents from a week ago, the national average price of regular unleaded reached $2.32 per gallon. Given the slide in crude oil prices, look for gasoline to trend down by a nickel or a dime per gallon in coming weeks. Diesel, now averaging $2.37 per gallon, should edge lower, too.
Natural gas remains the big winner in energy markets. The benchmark futures gas contract gained again this week, to reach $2.68 per million British thermal units (MMBtu). Hot weather over much of the country is fueling hefty demand at gas-fired power plants, which are working overtime to keep up with electricity usage. But barring an intense, wide-ranging heat wave, we think gas prices have about peaked. Look for the benchmark price to slip to $2.25 to $2.50 per MMBtu in coming weeks.