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Economic Forecasts

GDP Growth to Strengthen in Second Half of Year

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 »

The U.S. economy is poised to pick up its pace in the second half of the year. But overall, look for GDP to expand more slowly year over year, by 2% for 2016, down from 2.4% last year. First-quarter growth was revised up to a still-weak 0.8% pace, but should rebound in the second quarter and rise by at least 2%, before expanding at a 3% rate in the last six months of the year. The second-half growth spurt should guarantee a better 2017 growth rate.

See Also: All Our Economic Outlooks

Consumer spending, which accounts for about 70% of spending, will be the main engine for growth. Continuing gains in jobs and wages will fuel strong boosts in disposable income, enticing consumers to open their wallets after months of paying down various debts and hiking their savings rate.

Spending by consumers, in turn, will spark more home sales, buoying the housing market. Leisure and hospitality businesses will also hear their cash registers ringing more. Other positives: more government spending, a slow pickup in business investment and increased lending by banks.

To be sure, the economy still faces headwinds. Though oil prices are higher these days, the energy sector won’t show much new life until next year. And the still-strong dollar will continue to dampen the outlook for firms that make and export products for sale abroad.

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

Source: Department of Commerce: GDP Data

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