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Attachment 2 15 <br /> January/February 2016 <br /> NC STATE ECONOMIST <br /> COLLEGE OF AGRICULTURE & LIFE SCIENCES <br /> 2016 ECONOMIC OUTLOOK: A STRONGER BEAT TO THE ECONOMY? <br /> M.L. Walden, William Neal Reynolds Distinguished Professor and Extension Economist, NC State University <br /> National Economy: A Turning Point in 2015 <br /> Gains in the national economy were strong media—fell during the year and approached 5% <br /> enough in 2015 that the Federal Reserve made by year's end. Gains in the labor force and in <br /> a turn in their monetary policy. Late in the year, both employment counts (household and <br /> the Federal Reserve (the "Fed") announced the payroll) equaled or exceeded post-recessionary <br /> first increase in their key interest rate—the averages. Inflation continued to be a non- <br /> federal funds rate—since before the Great issue. The "core" CPI (Consumer Price Index, <br /> Recession of 2008-2009. The Fed cited the excluding food and energy) indicated that <br /> strength in the economy, and no signs of an inflation was at the Fed's preferred 2% rate, <br /> impending new recession, as reasons for their and that the all-item rate lay well below the <br /> move. Analysts also think the Fed wants to Fed's target. The all-item rate was clearly <br /> moderate recent strong gains in asset impacted by the sharp drop in oil and gasoline <br /> markets—such as the stock market—in order to prices. Also, interest rates were at or near <br /> avert an asset bubble. Asset bubbles are often historical lows in 2015, reflecting both the low <br /> forerunners to a recession, inflationary environment and the Fed's <br /> continuing accommodative posture. <br /> A look at key economic data in Table 1 <br /> supports the Fed's assessment of reasonable Key business sector indicators were also <br /> growth in the economy for 2015. Growth of real upbeat. Although relative business investment <br /> GDP (gross domestic product, adjusted for was below the recent (1990-2010) historical <br /> inflation)was stronger than the average over average, there was a gain from the post- <br /> the period since the end of the recession (2010- recessionary period (2010-2014). The same <br /> 2014), and approached the twenty year trend was seen for labor productivity. The <br /> average from 1990-2010. A similar pattern was housing market continued to rebound. The <br /> seen for real GDP growth per capita (per stock market's gains were considerably <br /> person). Especially bullish were strong gains in trimmed down in 2015 compared to the <br /> both real personal income and real personal previous few years; but this result was not <br /> consumption per capita; the figures for 2015 surprising considering the market has almost <br /> were above both the post-recessionary average tripled since the bottom of the recession. An <br /> (2010-2014) and the twenty year average international "vote of confidence"was <br /> (1990-2010). registered for the U.S. economy with the strong <br /> gain in the dollar's value. Since a stronger <br /> The national labor market also posted post- dollar makes U.S. exports more expensive, a <br /> recession improvements. The "headline" downside of this "vote" was a slight reduction in <br /> unemployment rate—the rate quoted in the exports. But with continued domestic oil <br /> North Carolina Cooperative Extension Service•Agricultural and Resource Economics <br />