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2016 U.S. & Global Economies

2016 U.S. & Global Economies

CFOs are Optimistic about U.S. Economy, but New Year May Feature Ups and Downs

John Kenneth Galbraith, one of the foremost economists of the 20th century, famously said, “the only function of economic forecasting is to make astrology look respectable.” Meaning, of course, predicting the future is not a science.

Yet there are some trends that offer us important guideposts as to what may be ahead in 2016. Many of these trend lines are steadily moving up, while others are moving in the opposite direction. If this seems like a roller coaster, you’re not too far off – 2016 could feature ups and downs. Plus, Americans go to the polls on Nov. 8 to elect their 45th president.

Here are a few of the facts, figures and prognostications that could help to shape the outlook for 2016 and how this may affect the HVACR industry:

The construction industry is expected to continue to expand in 2016, albeit at a slower rate of growth, according to Dodge Data & Analytics. According to its 2016 Dodge Construction Outlook, U.S. construction starts will rise 6 percent to $712 billion. This follows a 9 percent increase in 2014 and what was anticipated to be a 13 percent increase in 2015.

“For 2016, the economic environment should support further growth for the overall level of construction starts. While short-term interest rates will be going up in 2016, given the expected rate hikes by the Federal Reserve, the increase in long-term interest rates should stay gradual,” says Robert Murray, chief economist for Dodge Data & Analytics.

There is optimism about the economic health of the country among chief financial officers surveyed as part of the Bank of America Merrill Lynch 2016 CFO Outlook. Fifty-four percent of those surveyed indicated they plan to hire additional full-time employees in 2016, up from 52 percent surveyed a year ago.

Meanwhile, 89 percent of those CFOs in the survey expect sales growth in 2016 – up from 87 percent in 2015. Casting a pall over these results, however, is caution over global markets due to political and economic instability.

While CFOs may be more optimistic about 2016, it appears that U.S. consumers have less confidence in the economy.

Michael Maynard writes frequently on topics related to HVACR, architecture and construction. He can be reached at [email protected]

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