US Outlook Report: More Signs of a Stronger Second Half
Markets this week cheered the Fed’s somewhat dovish “dot-plot” of interest rate projections and Janet Yellen’s soothing tone at her press conference, but U.S. economic data continue to improve through June, and the near-term economic outlook appears to be shaping up pretty close to our forecast expectations. We still anticipate the first Fed rate hike could come as soon as September.
The U.S. economy is in the midst of a moderate growth rebound in the second quarter; our current estimate is 2.5%, on an annual rate. The rebound so far is being driven primarily by improving consumer spending and residential construction activity.
The consumer is in good shape right now. Labor market momentum is real. The GDP hick-up in the first quarter hardly touched the labor market. The unemployment rate is on track to drop toward 5.1% by the end of the year with another 3.0 million net non-farm jobs created in 2015. Wage growth already appears to be lifting as the labor market tightens and that trend should accelerate over the coming year.
There are more signs of life coming from the housing market as well. The housing market is rebounding from lackluster activity in 2014. Housing demand is much improved on rising job and income growth, while mortgage-rate increases have not poisoned the momentum.
By the second half of the year, real GDP growth is forecast to move back toward 3.0% growth as business investment and industrial production join the consumer and housing in the economic revival.
To find out more, check out this week’s US Outlook Report.
Tags: economy