With the ups and downs the U.S. economy has experienced the past seven years, trying to forecast what's going to happen in a given year has often seemed about as accurate as flipping a coin. There wasn't much agreement among the pundits, except that the results were not going to be pretty.
When it comes to 2015, there are some brighter spots (and more agreement) than we're used to seeing, but there are still some unknowns that will affect the economic environment.
Let's start with some of the good news.
Overall, Americans are feeling better about the economy than in the past. A recent national survey conducted by Hart-McInturff shows that 26 percent said the economy is excellent or good. That's a gain of eight points and equal with the percent reached in December 2007. In addition, 41 percent said now is a good time to invest in the stock market. That's an increase of 10 points.
Speaking of the stock market, numbers since the low point on March 9, 2009, have rebounded dramatically. The S&P 500 has climbed around 200 percent, the NYSE is up 165 percent, the NASDAQ has increased more than 260 percent, and the Dow Jones Industrial Average has gained more than 165 percent.
Unemployment numbers also are a bright spot. The most recent high was 10 percent in October of 2009, and it had fallen to 5.8 percent by October of 2014. In November, companies hired 321,000 more workers, the largest one-month gain in nearly three years. The Federal Reserve is forecasting that the rate will continue to decrease in 2015, with the year's average at about 5.5 percent. Other forecasts call for it to finish even lower, at 5.3 percent.
In addition, the National Association for Business Economics is forecasting that U.S. economic growth will jump 3.1 percent in 2015, compared to the 2.2-percent growth the country has experienced since the recession. The growth is attributable to continued job gains and increased consumer spending that is a result of the drop in energy prices.
Construction numbers are important to a large segment of the HVACR community, and the “2015 Dodge Construction Outlook” from Dodge Data & Analytics predicts that total U.S. construction starts for 2015 will rise 9 percent to $612 billion, a larger gain than the 5 percent increase to $564 billion estimated for 2014.
According to the report, commercial building will increase 15 percent, institutional building will advance 9 percent, single-family housing will rise 15 percent in dollars and 11 percent in units to 700,000, and multifamily housing will increase 9 percent in dollars and 7 percent in units to 405,000.
One potential problem that is percolating is the state of the global economy at large. One issue affecting it is the growing strength of the U.S. dollar, which could ruin emerging market economies that have large dollar-denominated debts, which in turn could trigger chaos in the global financial markets, according to the Swiss-based global watchdog Bank for International Settlements.
Also, European economies are still experiencing high levels of unemployment and the threat of deflation. Emerging economies, like China, are posting lower levels of growth, which also is putting a damper on the global economy. In fact, the Russian government has warned that its economy will fall into recession in 2015 as Western sanctions, in response to its role in eastern Ukraine, and falling oil prices begin to have an impact.
Many in the U.S. also will be watching interest rates this year. The Federal Reserve will announce on March 18 whether or not it will raise interest rates from zero. When it does happen, the raises are expected to be gradual.
Elaine Yetzer Simon is a freelance journalist based in Cleveland, Ohio. In addition to HVACR, she has covered a variety of industries during her career, including hotels, automotive repair and pest management. Contact Elaine at [email protected].