The U.S. economy will grow by more than 3 percent next year, its highest rate in 10 years, according to economists at the University of Michigan.
They say real gross domestic product will hit 3.1 percent next year and 3.3 percent in 2016, compared to 2.2 percent this year.
“We expect that 2015 will be the year when U.S. economic growth will finally accelerate meaningfully,” said UM economist Daniil Manaenkov in a news release.
“This year, severe winter weather joined the list of headwinds that have prevented U.S. economic growth from picking up. Even still, both private and total payroll job gains during 2014 are on track for their best performance since 1999. And going forward, strong GDP growth supports steady employment gains.”
In their annual forecast of the economy, Manaenkov and colleague Matthew Hall of the Research Seminar in Quantitative Economics in the school’s Department of Economics project the creation of 5.3 million jobs over the next two years — 2.7 million jobs next year and 2.6 million in 2016.
If those numbers come to pass, that will mean net creation of 10.3 million jobs from 2013 through 2016, the best four-year stretch since 1997-2000. And it will mean unemployment will continue to fall to 5.4 percent by the end of next year and to 5 percent by the end of 2016.
“We believe that growth is more than ready to accelerate,” Manaenkov said. “The housing sector is on a more solid footing, well-positioned for growth (and) the industrial capacity utilization rate is close to normal, which bodes well for investment.
The economists said that despite the change in control of the U.S. Senate to Republicans, fresh rounds of harsh fiscal austerity are unlikely and that U.S. monetary policy will remain unchanged.
Other predictions:
- Construction of new homes, both single-family and multi-unit housing, will rise from a 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.
- Sales of light vehicles will go 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 stable, with oil holding steady at about $79-$80 per barrel through 2016.
- Consumer price inflation and core inflation (the CPI excluding food and energy) will stay below 2 percent through 2016.
