The University hosted its 62nd Annual Economic Outlook Conference in Rackham Amphitheater Thursday and Friday.
Sponsored by the University’s Research Seminar in Quantitative Economics, the event featured 13 presentations focusing on the U.S. economy on the first day and Michigan’s economy on the second.
Daniil Manaenkov, RSQE assistant research scientist, and Rackham student Matthew G. Hall, RSQE forecasting team member, gave the conference’s first speech, which covered the country’s economic outlook for 2015 and 2016.
“We expect that 2015 will be the year when U.S. economic growth will finally accelerate meaningfully,” Manaenkov said.
He said he expects the overall economic growth, measured by real gross domestic product output, to rise — from the current 2.2 percent to 3.1 percent in 2015 and 3.3 percent in 2016.
Manaenkov and Hall also foresee 2.7 million jobs being generated in 2015 and another 2.6 million in 2016, for a total of 5.3 million across the country over the next two years.
Michigan Research Prof. George A. Fulton, director of RSQE, discussed the job market forecast for Michigan in his presentation on Friday. He said the state will have created about 463,000 jobs between the summer of 2009 and 2016, with the largest growth being in the professional and business sector where 33,000 jobs are expected to be added.
The economists predict that the unemployment rate for both the U.S. and Michigan should continue to fall over the next two years.
Manaenkov and Hall predicted the national rate to lie at 5.4 percent at the end of 2015 and then drop to 5 percent by the end of 2016. Michigan’s unemployment rate is currently at 7.2 percent, but Fulton expects it to be at 6.7 after 2015 and a low 6.3 percent going into 2017.
“In all, the Michigan economy has certainly come a long way in the past five years, and that progress should be celebrated,” Fulton said.
Nigel Gault, Co-Chief Economist at The Parthenon Group, a consulting firm, disagreed with Manaenkov’s prediction for U.S. GDP growth.
“We need to be realistic about long term growth in the coming years,” he said. “We should expect 2 percent (growth) rather than 3 percent.”
Along with GDP and job growth, the housing market is projected to continue to recover slowly after home sales plummeted following the 2009 recession.
“Job gains is the key determinant,” said David W. Berson, Nationwide Mutual Insurance Company’s senior vice president and chief economist while presenting on home sales. “The good news is that job growth has been picking up, and the monthly gains (in home sales) in 2014 are by far the strongest in this expansion.”
When asked which elements of his presentation of the conference as a whole he believed to be most relevant to college students, Manaenkov reiterated his predictions for the job market.
“There’s research that suggests that the state of the labor market when one gets their first job out of college has a permanent effect on lifetime income,” he wrote in an e-mail. “Because of that, current students who will graduate into a better market will probably be better off than those that did graduate recently.”
Trends in vehicle sales, vehicle safety and gas prices were also a topic of discussion on both days of the conference.
Nationwide, light vehicle sales are expected to increase. Manaenkov and Hall predicted 16.6 million units sold in 2015 and 17 million in 2016, with truck sales dominating the market as demand for SUVs and CUVs, crossover utility vehicles, increases.
Richard Wallace, director of Transportation Systems Analysis at the Center for Automotive Research, discussed the vehicular innovations we should expect to see in the upcoming years, particularly in vehicle connectivity and communication.
CAR is researching a topic called connected vehicles, which would allow close together cars on the road to communicate with each other and roadside infrastructure. Wallace hopes this communication would increase vehicle and roadway safety and mobility and reduce greenhouse gas emissions.
“You don’t need to know about vehicles that are miles away from you, but you do need to know about ones that are in your proximity,” Wallace said.
Manaenkov and Hall project gas prices to maintain their current levels, as oil prices should remain stable at approximately $79 to $80 per barrel through 2016.