This year’s U.S. economy will continue to grow, although slowly, based on economic indicators from 2015 such as confidence in automobile sales, disillusionment with GDP growth, and indecision in Washington, according to a new report out of Northwood University in Midland.
The authors of the report, Keith Pretty, president and CEO of Northwood University, and Timothy Nash, senior vice president and the director of the McNair Center for the Advancement of Free Enterprise and Entrepreneurship, predict the U.S. real GDP will grow at an annualized rate between 1.8-2.1 percent this year, compared to 2.2 percent in 2015. They say the global economy will grow at an annualized real GDP rate of 2.6-3 percent compared to 2.9 percent in 2015.
Pretty and Nash say U.S. unemployment will average 5.1 percent or above in 2016 (the unemployment rate in 2015 was about 5.3 percent). They say real interest rates will be at 1-1.25 by the end of 2016, compared to .5 at the end of 2015.
They say U.S. inflation will average between zero and 2 percent in 2016, while the Dow Jones Industrial Average will end the year just below 18,200. They predict oil will average nearly $40 a barrel (the average in 2015 was $51 a barrel).
In terms of the political landscape, Pretty and Nash say Congress and President Obama will leave a larger deficit burden and a more difficult financial position to be dealt with in 2017.
"We predict that the fall 2016 general election will bring a pro-business leader to the White House — one who truly can work with Congress to bring about market-oriented tax reform," Nash says. "This includes a long-term model to balance the federal budget and drive GDP growth to between 3 and 4.5 percent consistently on an annualized basis."
To view the full report, click here.