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Economy in Brief

NABE Forecast Calls for Firm and Steady Economic Growth
by Tom Moeller  March 30, 2015

The just-released National Association for Business Economics forecast of 2.9% growth in U.S. real economic activity next year follows an expected 3.1% rise this year. Quarterly GDP growth is expected to hold fairly steady near 3.0%. Personal consumption expenditures growth is expected to be 3.0% next year following a 3.3% rise this year, the quickest growth rate since 2006. Growth in business investment in equipment & software is expected to remain firm at 5.8% in 2016 while growth in spending on nonresidential structures should improve to 4.4%. Residential investment should continue to be the economy's strongest sector with an 8.2% increase forecast for 2016 after a 6.6% rise this year. The rate of inventory investment should diminish next year after firming this year and last. Real net exports are expected to deteriorate.

Forecasts for housing starts suggest continued growth to 1.30 million in 2016 following 1.15 million this year. Expectations for light vehicle sales also show continued improvement to a fifteen year high of 17.00 million units following an expected 16.8 million in 2015. Average monthly gains in payroll employment are expected to ease to 216,000 after strength near 251,000 this year. The unemployment rate is expected to average 5.1% following 5.4% this year. Consumer price inflation is expected to increase to 2.1%, the quickest rise since 2012.

The forecasted 3.25% interest rate on 10-year Treasury notes at the end of next year follows the lessened estimate of 2.62% at the end of this year. The Fed is expected to begin raising interest rates in the third quarter of 2015. Corporate profits next year should rise 4.9% following 4.7% growth this year and last. The Federal government budget deficit is expected to shrink modestly to $453 billion in 2016, roughly one-third its $1.4 trillion peak in 2009.

The figures from the latest NABE report can be found in Haver's SURVEYS database.

National Association For Business Economics 2016 2015 2014 2013
Real GDP (% Chg. SAAR) 2.9 3.1 2.4 2.2
  Personal Consumption Expenditures 3.0 3.3 2.5 2.4
  Nonresidential Structures 4.4 4.6 8.2 -0.5
  Nonresidential Equipment & Software 5.8 5.6 6.4 4.6
  Residential Investment 8.2 6.6 1.6 11.9
  Change in Real Business Inventories (Bil. $) 65.0 70.8 70.6 63.5
  Real Net Exports (Bil. $) -523.0 -492.9 -452.6 -420.4
Housing Starts (Mil. Units) 1.30 1.15 1.00 0.92
Light Vehicle Sales (Mil. Units) 17.0 16.8 16.4 15.5
Payroll Employment Average Monthly Change (000s) 216 251 260 199
Unemployment Rate (%) 5.1 5.4 6.2 7.4
Consumer Price Index (Y/Y %) 2.1 0.6 1.6 1.5
Fed Funds Rate (%, Year End) 2.000 0.750 0.125 0.125
10-Year Treasury Note (%, Year End) 3.25 2.62 2.17 3.04
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