The economic “wind is in your sails” for 2016 and even into 2017 as the recovery continues. That forecast comes from economist Alan Beaulieu speaking at FPA’s Fall Executive Conference.
Beaulieu says the economy is in the “slower growth” phase following the rebound from the 2008 recession. He foresees a 2.1% growth rate in the gross domestic product for 2016. And, he sees a 3.2% figure for 2017.
One question mark that has hung over the economy in recent years—swings in oil prices—is becoming a non-event, says Beaulieu. Currently, the U.S. consumes about 90% of its energy from domestic sources. That significantly reduces the impact of Middle East turmoil.
Against the forecast of steady growth, some global factors could influence performance:
- China’s economic instability. It could impact the dollar because of the amount of debt China holds.
- Low oil prices.
- South America’s trend toward nationalism.
- World demographics, particularly for countries such as Japan with aging populations.
Expect interest rates to rise. Forecasts by members of the Fed Open Market Committee cluster around a 1.50% level in 2016, and somewhere around 3% by 2017. Further out, into 2018 and beyond, the consensus is between 3% and 4%.
What To Do in 2016
Here’s Alan Beaulieu’s list of steps business can take, given his 2016 forecast:
- Find out where you are in your business cycle.
- Implement growth strategies
- Spend money on marketing
- Spend money on people and process, and then spend more
- Plan for higher wages
- Plan on higher energy costs in 2016