Economic forecast, Spring 2015

Becon Economics, Spring 2015, "U.S. Forecast:  Nation to be economic powerhouse in 2015."

"Domestic Demand: Across the U.S., increased business spending, rising incomes, cheaper oil prices, and low interest rates will all help push national GDP growth into the 3% range in 2015.

Frothy Financial Markets? Although the markets are beginning to trend in a ‘frothy’ direction, none of the numbers suggest a significant misalignment at the moment.

Interest Rates Hold In Place: The Fed has little reason to "even consider" raising short-term interest rates. Beacon Economics does not expect any movement on rates until the end of the year at the earliest.

Consumers Not Moved By Gas Prices: Falling prices at the pump have not boosted U.S. consumer spending growth. The average U.S. household will save $700 to $900 this year due to price declines but consumers will move slowly to increase spending as they wait to see how permanent the changes will be."

Related news article -  Business Insider/Miles Udland, 2/27/15, "America's fourth quarter could've been worse." ".... The second estimate for Q4 GDP showed the economy grew at an annualized rate of 2.2%, down from the first estimate for 2.6% growth. ....  For all of 2014, the economy grew by 2.4% compared to growth of 2.2% in 2013."  Referenced source:  Bureau of Economic Analysis, US Department of Commerce News Release, 2/27/15, pdf pages 16.

Related GDP information  -  Investopedia/Staff, "What is GDP and Why is it so important?" "The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year."

CNBC/Mark Koba, 11/3/11, "Gross Domestic Product:  CNBC explains." "What is nominal GDP and what is real GDP?" ..."... nominal GDP does not take into account inflation, and real GDP does. But it is an important distinction because this is why some GDP reports get revised..... "How does the GDP affect the average citizen?" "When the economy is healthy, there is usually low unemployment and wage increases, as businesses demand labor to meet the growing economy. However, if the GDP growth rate is speeding up too fast, the Federal Reserve may raise interest rates to stem inflation—or the rising of prices for good and services. That could mean loans for cars and homes would be more expensive. Businesses too would find the cost of borrowing for expansion and hiring to be on the rise. If GDP is slowing down, or is negative, it can lead to fears of a recession which means layoffs and unemployment and declining business revenues and consumer spending. The GDP report is also a way to look at which sectors of the economy are growing and which are declining. It can also help gear workers toward training in those sectors that are growing" 

Posted by Kathy Meeh