NIBCO Q4 Regional Economic Forecast
US OUTLOOK FOR EARLY 2017
To view the PDF version of this report, please click HERE.
Deceleration has been the story for both consumer spending and housing construction so far in 2016. Retail Sales have cooled across the US to a 1.5% annual growth rate. Housing Starts are now growing at 3.0%, compared to a 16.8% growth rate back in March.
Where from here? There are positive signals on the horizon. The Prevedere Residential Construction Leading Indicator is rising, signaling improving economic environment for home improvement spending and new construction beginning later this year and early next year. We are seeing a similar uptick in the Retail Leading Indicator. Low unemployment and improving inflation-adjusted incomes are carrying the US economy. Better business conditions can be expected over the next six months. The improvement is likely to be gradual, so do not be surprised if conditions still appear weak over the next few months.
As we move through the second half of the year, many states are experiencing construction trends lower than last year. However, the economic cycle is approaching a low, and better conditions are on the horizon.
NORTHEAST REGIONAL OUTLOOK
The Northeast economy weakened over the past three months. Housing Permits are still 5.2% ahead of last year, but the range of conditions has widened and a number of states are below year-ago levels. Spending levels are barely keeping pace with last year. We expect to be at-or-close to the bottom of the cycle for retail. Expect improving growth rates to kick off 2017.
0.1% growth isn’t good, but it isn’t panic-button bad either. The Northeast has seen periods of 0-1% growth for a couple months every year since 2013. Each period has been followed by a rebound back to 1-2% growth shortly after.
NEW HOUSING PERMITS
Permit levels are cooling off from elevated 2015 levels around major metropolitan areas such as NYC, DC, Chicago and parts of New Jersey. Rural & small city areas have done better in 2016.
Written by: Andrew Duguay - Sr Economist - Visit www.prevederesoftware.com to learn more.
Posted on Tue, October 25, 2016
by AIS Admin filed under