UM: Economy will take off next year
The U.S. economy will grow at its fastest pace in a decade next year, according to a new University of Michigan economic forecast released Thursday in Ann Arbor.
The rate of growth for the country’s gross domestic product will jump from 2.2 percent this year to 3.1 percent in 2015 and 3.3 percent in 2016, according to economists Daniil Manaenkov and Matthew Hall of the Research Seminar in Quantitative Economics in the UM Department of Economics.
The annual survey examines both the national and state economies. The Michigan survey is set to be released Friday morning.
“We believe that growth is more than ready to accelerate,” Manaenkov said in a statement. “The housing sector is on a more solid footing, well-positioned for growth. The unemployment rate dipped below 6 percent and is likely to keep falling, nudging higher wage growth. The industrial capacity utilization rate is close to normal, which bodes well for investment.”
The two economists also project the addition of 5.3 million jobs during the next two years, with 2.7 million jobs being added next year and another 2.6 million during 2016. That would bring the total jobs created from 2013 through 2016 to 10.3 million, marking the country’s strongest four-year growth since 1997-2000. It would push unemployment down to 5.4 percent in 2015 and to 5 percent by the end of 2016, which most economists consider to be full employment.
The economic survey also projects stable gas prices, increasing auto sales and an upward trend in home construction and sales:
■Sales of light vehicles will continue to grow from 15.5 million units sold in 2013 and 16.3 million sold this year to 16.6 million in 2015 and 17 million in 2016;
■Gas prices should remain relatively stable as the price of oil holds steady around $79-$80 per barrel through 2016;
■Inflation will remain lower than average, staying below 2 percent through 2016;
■New-home construction will continue to rise from 1 million units this year to more than 1.2 million next year and nearly 1.5 million in 2016. Sales of existing single-family homes are expected to increase from less than 4.4 million this year to nearly 4.7 million in 2015 and about 4.8 million in 2016.