2016 Economic Outlook Dennis A. Johnson, CFA Chief Investment Officer
Points of View Fed achieves lift-off, future increase in interest rates will be data dependent. U.S. real GDP growth is projected to be 2.4% in 2016 versus 2.5% in 2015. Consumer prices are projected to increase by 2.1% in 2016 compared to inflation of 0.2% in 2015. Michigan’s economy is projected to continue to grow in 2016, but at a more measured pace versus the last several years.
Federal Reserve
U.S. Economy
Inflation
Source: Federal Reserve Bank of Dallas
International Economics
Economic growth in the euro zone has stabilized
Canada is a mixed bag
Mexico’s economy hanging in their despite weak energy prices
India remains one of the fastest growing economies
Japan’s economic growth remains volatile
China’s government transitioning the foundation of their economy for less volatile long-term growth
Michigan Economy
Conclusion
U.S. economy expected to perform relatively well in 2016. Inflations trends higher despite downward pressure from oil and the impact of the strong U.S. dollar. Next rate hike by the Fed could occur at their March meeting. Economic growth in Michigan may begin to underperform the rest of the U.S. due to the maturation of the current auto cycle and the impact of the strong U.S. dollar on the manufacturing segment of the economy.
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