by Bill McBride on 12/31/2015 02:51:00 PM
Thursday, December 31, 2015
Here are a few excerpts from a piece by Goldman Sachs economists Jan Hatzius and Zach Pandl: "8 Questions for 2016"
On GDP Growth:
We forecast that growth will improve only slightly from its current pace, averaging 2.25% next year.On Housing:
[W]e see a strong case for a continued recovery in housing starts from about 1.2 million currently to 1.4-1.5 million over the next few years—even without a major easing in lending standards or a rebound in the headship rate of young adults ... we expect that 2016 will mark the end of the post-crisis housing market in several respects. We forecast that the rebound in house prices will slow, that single-family construction will account for a rising share of new housing starts, and that the homeownership rate will finally stabilize.On Fed hikes:
[A] standard policy rule coupled with the Fed's economic projections (or our own) calls for a roughly 125bp increase in the funds rate by end-2016. While the FOMC's preference for a "gradual" path of hikes suggests that four is most likely, the economic case for the full 100bp implied by the Summary of Economic Projections (SEP) is strong.
Posted by Bill McBride on 12/31/2015 02:51:00 PM