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Economic Outlook for Second Half of 2017

Halfway through the year, a growing economy has hopefully presented many opportunities to expand and profit. A tight job market and increasing consumer spending is expected to lift the US economy through the remainder of the year. From a momentum standpoint, some sectors are peaking. The pace of growth in new single-family permits has noticeably slowed across most states on a year/year basis. Some states are down versus last year. Our indicators suggest further deceleration is in store. Two trends we are watching are Real Disposable Personal Income and Job Openings. Inflation-adjusted incomes are not growing as fast this year, primarily because inflation has picked up a bit. Job Openings are at high levels, but have stopped growing year-over-year (-2.5%). If these trends continue, momentum may cool in the broader economy leading into 2018. It is still early, and for now, the shortage of skilled labor is challenging contractors all over the US. An extra focus on retaining quality employees will be crucial to capturing as much of the 2017 economic growth as possible.

Northeast Regional Outlook

The economy in the Northeast is expanding, but the pace is mild. The new housing construction in the Northeast is looking more variable than we have seen in several years and total consumer spending is at record highs but just barely above last year. Inflation is also picking up.

Consumer Spending

The Northeast market is up a mild 0.2% vs last year on an inflation adjusted basis. The Consumer Price Index is 2.4% ahead of last year and rising, the first time inflation has been north of 2% since 2012.

New Housing Permits

The eastern seaboard has not had a robust start to the year as permit levels challenge to keep pace with last year. The Lakes Region is presenting more opportunities, led by the potential-bubble-territory Ontario market.

Written by: Andrew Duguay - Senior Economist - Visit www.prevedere.com to learn more.