The country’s recent economic policies will extend the nation’s recovery from the Great Recession and avoid an economic downturn through 2021, says Sean Snaith, national economist and director of UCF’s Institute for Economic Forecasting, which released its Q2 U.S. Forecast report today.
Led by efforts to reduce government regulation of the economy and simplify the nation’s tax laws, Snaith predicts increased productivity and economic growth will continue over the next few years. According to the forecast, The Tax Cuts and Jobs Act, in tandem with ongoing deregulation efforts from the White House, are pumping new life into the nation’s economic recovery — more than 10 years after the Great Recession.
In the report, Snaith predicts:
- The housing market will improve through 2021 — national housing starts (new residential construction) will rise from 1.25 million in 2018 to 1.36 million.
- Unemployment will decline to 3.1 percent in early 2020 and job growth will keep up with the growth of the labor force.
- Job growth will continue — the rate of growth will reach 1.6 percent in 2019, then slow to 1.2 percent in 2020 and 0.9 percent in 2021.
- Real GDP growth will pick up to 3.1 percent in 2019 before slowing to 3 percent in 2020 and 2.7 percent in 2021.
“Recent data releases have put to bed, at least for now, the narrative that the U.S. economy is on the brink of recession,” Snaith says. “We are currently in the longest economic expansion in U.S. history and it is likely to continue for the next few years.”
“We are currently in the longest economic expansion in U.S. history and it is likely to continue for the next few years.” — Sean Snaith
Consumer spending is expected to reach new highs as ultra-low unemployment rates, rising disposable income and faster wage growth promote consumerism. Consumption spending will rise to 2.7 percent in 2019, then further accelerate to 3.7 percent in 2020 and to 3.8 percent in 2021.
A fruitful economy, however, often leads to interest rate hikes, which Snaith predicts will occur over the next three years. The federal funds rate is projected to hit 3.5 percent by the end of Q4 2021, due to the sheer economic strength brought on by deregulatory policies from the White House.
“All expansions will eventually give way to the next recession,” Snaith says. “No election or policy mix has ever prevented that from occurring, but the right policies can delay the inevitable, and just those types of policies are currently in place.”
For the complete U.S. report from the Institute for Economic Forecasting, visit business.ucf.edu/centers-institutes/institute-economic-forecasting/.
The Institute for Economic Forecasting strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses.
Snaith is a national expert in economics, forecasting, market sizing and economic analysis who authors quarterly reports about the state of the economy. Bloomberg News has named Snaith as one of the country’s most accurate forecasters for his predictions about the Federal Reserve’s benchmark interest rate, the Federal Funds rate.
About UCF College of Business
Established in 1968, the UCF College of Business offers degrees at the bachelor’s, master’s, doctoral and executive levels. All programs, as well as the Kenneth G. Dixon School of Accounting are accredited by AACSB International – the Association to Advance Collegiate Schools of Business. The college provides high-quality academic programs designed to give students a competitive advantage in the world of business now and in the future. Learn more at business.ucf.edu.