- Unemployment Won’t Go Far, Finishing Around 5%
At 4.6% as of November 2016, the unemployment rate was far below the historical average of 5.8%, according to Bureau of Labor Statistics data since 1948. In fact, unemployment was at the lowest point since 2007, indicating there is little room for further improvement.
“It is unlikely to fall much further,” said Bruce E. Hansen, distinguished chair of economics at the University of Wisconsin-Madison. “It may either stay roughly constant, as it has recently, or increase slightly.”
With that in mind, we expect the unemployment rate to settle around 5% during 2017.
- U.S. Auto Sales Will Surpass 17M For The Third Straight Year
Total light-vehicle sales have risen consistently since September 2009, reaching a record high of 17.4 million units in 2015 that we might narrowly surpass this year. And 2017 is shaping up to provide more of the same, with expectations for another 17+ million units sold and the potential for a new annual record, depending on how well consumers manage rising debt levels and increased interest rates.
“Auto sales will remain robust,” said Scott E. Hein, chair of the Texas Tech School of Banking and co-editor of the Journal of Financial Research. “But growth will not accelerate since this has been the one area that has done well in the weak economic growth environment experienced over the last half dozen year.”
With such headwinds in mind, however, it is unlikely that the U.S. auto industry’s boom can continue much beyond 2017. So we can expect sales volume to begin regression toward the historical mean of just over 15 million vehicles sold per year.
- Existing Home Sales Will Rise To 6M, Despite Higher Rates
- We expect existing home sales to reach 6 million in 2017, increasing by roughly 200,000 units from the 5.8 million forecast for year-end 2016 by the National Association of Realtors. Interestingly enough, higher rates might actually be the reason for the growth.
“If interest rates rise slowly, we may see a nice bump in home sales and mortgage availability as buyers see low interest rates slowly fading and banks have higher rates to buffer against risk,” said Dr. Robert Eyler, director of the Center for Regional Economic Analysis at Sonoma State University.