The U.S. economy will continue to expand, with growth in 2016 forecast to reach 2.3 percent and diminishing risk from global volatility, the ABA Economic Advisory Committee said yesterday.
The committee of 15 chief economists at some of the nation’s largest banks said the seven-year expansion is “likely to last at least another couple of years,” said EAC Chairman Carl Tannenbaum, chief economist at Northern Trust. “Important avenues for growth remain and the financial system is far healthier than it was eight years ago. This means that potential global maladies are unlikely to produce contagion for the U.S. economy.”
The EAC said it expects growth to continue to create jobs and lead wages higher, projecting 2.2 million new jobs in 2016, which will push wages up 2.5 percent and unemployment down to a nine-year low of 4.7 percent.
“Consumers are in awfully good shape,” said Tannenbaum, noting that personal consumption is projected to grow 2.5 percent in 2016 and 2.1 percent in 2017. The housing market is “gradually finding its footing,” he added, noting that the committee expects low mortgage rates, increasing home values and a projected 7 percent rise in residential investment in 2016 to continue to drive its recovery.
Committee members also echoed the Federal Reserve’s expectations for gradual rate increases over the next several years as inflation and unemployment allow.