Economic Forecast for 2016 Election

The New York Times asked 17 economists to weigh in with their predictions about the economy leading up to November 2016. Overall, it’s not good news for anyone who wants to run for office on complaints about “the Obama economy.”

They said they believed that unemployment would be the lowest it has been during an election since George W. Bush and Al Gore faced off in 2000, when it stood at 3.9 percent. The median forecast for the unemployment rate when voters go to the polls in November 2016 was 4.8 percent (which would be down from 5.3 percent last month). They saw only a 15 percent chance of a recession starting by next Election Day. Interest rates, inflation and gasoline prices should all be a bit higher than they are now, they said, while staying quite low by historical standards…

“Odds are good that by Election Day the economy will be at full employment, growing strongly,” said Mark Zandi, chief economist of Moody’s Analytics. “The economic winds will be at the back of incumbents.”

The forecasters predict GDP growth at approximately 2.8 percent in the year before the election. As we’ve seen already, Jeb Bush is promising to maintain growth at 4%. But most see that as unrealistic.

“The 4 percent G.D.P. goal of some candidates is unrealistic with the baby boom generational wave retiring and spending less,” said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ.

The one weak spot is the issue that has been of concern for awhile now.

Their consensus was 2.8 percent growth in average hourly wages in the 12 months before the election, slightly higher than the 2 percent rise in prices. That implies that the weak spot of the Obama economy, in compensation for ordinary workers, will remain that way heading into 2016.

To directly address that problem, Democrats are talking about raising the minimum wage and changing the federal government’s overtime rules. That is likely going to be an easier sell to voters than Jeb Bush’s suggestion that Americans simply need to work more hours in order to get a raise.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.