2 Reasons the U.S. Economy Should Fare Better in 2017

Rick explains why there's a good chance U.S. growth will pick up from 2016.

There’s a good chance the U.S. economy will perform solidly this year, experiencing a growth pickup from 2016.

Why? I see two key shifts helping to propel growth higher, albeit within the context of broad structural trends keeping growth rates lower than in prior economic cycles. Changes to the U.S. demographic profile and rapid technological change cannot be altered meaningfully, and are likely to hold down growth. Still, within a range of “what is possible,” there are reasons to be optimistic about the U.S. economy in 2017.

Improving confidence

Since the November election, both consumer and chief executive officer confidence levels have improved remarkably amid expectations of more fiscal stimulus. This should translate into greater spending, and economic growth, in the year ahead. Indeed, the Conference Board’s index of consumer confidence expectations index is a very strong leading indicator of real year-over-year Personal Consumption Expenditures (PCE), as the chart below shows. Expenditures noted on the PCE drive roughly 70% of U.S. gross domestic product (GDP), according to our research.