Gene Epstein devotes his latest “Economic Beat” column in Barron’s to the future outlook for American gross domestic product.
Growth in real gross domestic product is probably running at an annual rate of 3.5% in the calendar quarter just ending, and should persist at 3.5% in the year to come, a forecast that would make 2015 the best-performing year since the expansion began in mid-2009.
A 3.5% forecast for next year is consistent with the optimistic consensus—the average of the highest 10 forecasts—of Blue Chip Economic Indicators, released on Dec. 10. It’s more than half-a-percentage point higher than Blue Chip’s overall consensus of 50 forecasters, and higher by the same margin than the “central tendency” projection released on Dec. 17 by the Federal Open Market Committee. …
… THE CORE ARGUMENT, then, for 3.5% growth in 2015 is that the U.S. economy is in the benign grip of a virtuous circle, with the key positive factors reinforcing one another, all lubricated by low energy prices. The real question is why the economy can’t growth at 4% or better on a sustained basis, as it has in previous expansions. Answer: There are too many potential negatives, including weaker economies abroad, which will put a drag on exports, an only modestly improving housing market, and the next phases of Obamacare, which could inhibit growth of business and employment.
