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Economic Forecasts

Consumers Will Pace GDP Growth

GDP 1.8% 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 1.4% by end '16 More »
Inflation 1.8% for '16, up from 2.4% in '17 More »
Business spending 4% gain in '16, after drop in '15 More »
Energy Crude oil trading from $40 to $45 per barrel in Sept. 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 »

The U.S. economy likely will maintain a moderate growth pace for the rest of the year. GDP was revised up to a still modest 1.1% pace in the first quarter, and it is expected to rebound in the second quarter to about 2.4%. Look for the economy to maintain roughly a 2% to 2.5% pace the last six months of the year. Growth in domestic spending will probably improve, but this may be counterbalanced by slower export growth as a result of the rise in the value of the dollar. Britain’s vote to leave the European Union sent the values of the safe haven currencies -- the dollar and the Japanese yen -- higher. Also, the uncertainties that Brexit has introduced about the prospects for the global economy will likely depress business spending on new projects for a time.

See Also: All Our Economic Outlooks

For the year as a whole, look for U.S. GDP to grow by about 1.8%, down from 2.4% in 2015. Growth in 2017 will likely be a little better, at around 2%. Of course, 2017’s outlook is apt to be adjusted as more information about political and business reactions to Brexit becomes available.

Consumer spending, which accounts for about 70% of GDP spending, will be the main engine of growth. Continuing job and wage pickups will fuel strong gains in disposable income. Robust consumer spending will, in turn, spark more home sales, buoying the housing market. Leisure and hospitality businesses can also expect to hear their cash registers ring more frequently.

See Also: What the Fed's Eventual Rate Increase Means to You

Source: Department of Commerce: GDP Data

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