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NIBCO Regional Economic Forecasts

US OUTLOOK FOR EARLY 2017

With 2016 mostly behind us, it is time to look forward into next year. Rising wages, low unemployment and appreciating home values have helped the consumer this year. The strength of these factors will continue to bring more spending power to the average person in 2017.

The health of the consumer may not directly translate into strong growth in new construction in 2017. Long-term interest rates are starting to move higher, putting a damper on new home sales. Builders have been pulling back the reigns on new activity; single-unit building permits have slowed from around 10% growth in the first half of the year to 3-6% in recent months. Our Prevedere Residential Construction Leading Indicator, which looks at multiple factors such as interest rates, permits and wages, is now declining, suggesting the deceleration trend in construction will continue in the first half of 2017. Expect positive consumer trends to help counterbalance softening growth in new construction to start the year.

NORTHEAST REGIONAL OUTLOOK

Our outlook for 2017 is mildly positive. Consumer Spending is expected to improve from the current 0.7% growth rate. Rising home values should encourage consumers to spend more on their property. However, the pipeline of new home construction is still cooling in many states from strong levels a year ago.

CONSUMER SPENDING

While 0.7% growth is lowest in the US, it is still an improvement from the 0.1% growth seen last quarter. The overall trend in retail is positive, expect better growth numbers to start off 2017.

NEW HOUSING PERMITS

Permit levels in the Northeast are 6.2% ahead of last year. The feeling is very different depending on where you are, but the overall trend has been toward decelerating growth. Our leading indicators suggest this will continue in the coming months.

Written by: Andrew Duguay - Senior Economist - Visit www.prevederesoftware.com to learn more. To see the PDF version of this forecast, click HERE.