2016 Economic Forecast
Robert Morgan, an economist with Austin Associates in Toledo, OH, recently shared his Economic Forecast for 2016 with some of Citizens National Bank’s business customers. Overall, his outlook is a positive one and businesses should be optimistic regarding opportunities for growth in the upcoming year. Here are a few highlights from his presentation.
- Unemployment will drop to less than 5%. Wage and income growth has been fairly stagnant over the last few years. Companies will have to start paying more to retain and attract qualified workers. This will boost consumer confidence and hopefully increase personal consumer expenditures which accounts for 68% of our economy. The downside is that increased labor costs will result in higher prices and ultimately some inflation.
- Job growth will average more than 200,000 per month. This is dependent upon there being enough people to fill the created jobs.
- The housing industry will remain strong. As people begin to consider purchasing homes again, existing home sales’ biggest barrier will be a lack of inventory. This will result in more housing starts, hindered only by the lack of skilled labor available to meet the demand. Average home values have increased by 8% over the last 12 months making them a good investment again.
- The auto industry will continue to have strong sales. The average age of the fleet of cars in the US is currently 10.1 years old leaving plenty of opportunity for new car sales over the next few years.
- Interest rates will begin to rise. The Fed has already indicated their intent to raise short term interest rates over a period of time. This is to avert risk-taking by investors looking for more lucrative investments than can be had in traditional savings vehicles.
- Real GDP will grow 3-3.5% over the next year.
To hear more from Bob, visit CNB’s YouTube page.