COLUMBUS, IN – At least one economist is feeling good about the U.S. economy. Speaking at the 53rd ACT Research seminar Tuesday, Augustine Faucher, senior economist for PNC Financial Services Group, told the audience that the market “continues to look good for U.S. produced goods.” He cited consumer optimism and housing as reasons the U.S. economy is “hitting its stride.”
Businesses are seeing high profits but labor costs remain low. Faucher said that productivity growth has slowed, so if businesses want to see further productivity gains they will need to hire more workers. He expects to see “close to full employment” in 2016. He also says he expects wage growth to pick up.
Since borrowing costs are low, Faucher expects to see more commercial construction and investments in equipment.
Consumers are benefitting from job gains, low inflation and lack of tax hikes. In addition, lower gasoline prices are saving consumers more than $100 billion, according to Faucher.
“The automobile industry is a good example of what’s happening with consumers,” he said. With the average age of cars at 11.5 years, consumers are buying new ones, making 2015 the best year for car sales since 2001. He says consumer spending in general is solid and that consumers are comfortable spending money – but also are saving at a high rate.
One potential negative is that the strong dollar is likely to pull exports down. “The biggest drag on the U.S. economy is what is going on overseas. The dollar has strengthened 15% over the last year and global growth is soft,” he said.
Faucher said he sees solid economic growth through 2016, although some of the energy-producing states are at risk because of the big drop in energy prices.