Major Economists Forecast Slowdown in 2016

For 2015 the NABE March forecast showed those members polled had a median forecast of 3.1% gross domestic product (GDP) improvement this year, falling to 2.9% next year. A typical recovery pattern would move the GDP increase to close to 4% or better.

Any acceleration of GDP marries a better job market and action from the Federal Reserve. The NABE forecast follows the pattern:

The panelists’ median forecast is for net new job creation to average approximately 250,000 per month in 2015 and 216,000 per month next year. The unemployment rate is expected to continue its downward trend over the next several quarters, reaching 5% by the second half of 2016.

Also:

“Against this backdrop, 88% of panelists believe the Federal Reserve will commence tightening of monetary policy in the second or third quarter of 2015,” adds Silvia. “Fifty-five percent expect a third quarter ‘liftoff’ — up from the 46% who held this view in the December Outlook survey. The federal funds rate is forecasted to reach 0.75% by the end of the year — identical to expectations in December — and 2% by the end of 2016. Forecasts for both years are similar to the median assessment of members of the Federal Open Market Committee (FOMC) communicated in March.”

The acceleration will come with no inflation. The group’s median forecast for Consumer Price Index (CPI) this year is less than 1%.

There has been a nagging issue for many experts on the economy. Job growth has moved faster that the economic recovery as a whole. Often a 5% unemployment rate marries with rapid increases in GDP and inflation. The current recovery does not have those earmarks. To make matters more complicated, the growth of corporate earnings, at least among the S&P 500, have cratered.

Something is wrong with the economy, and the NABE report has missed it

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