In last year’s economic forecast, Professor Beckenstein predicted the real GDP for the last quarter of 2013 through the third quarter of 2014 would be 2.6 percent. The actual growth was 2.7 percent. “Occasionally, I get lucky,” he said.
The good news: The U.S. is strong, despite the debt. We have a lot of positive economic signs; labor markets are healthier, small business optimism measures are solid and consumer sentiment is strong.
So what can we expect?
- Real GDP growth will be about 3.2 percent in the period including the last quarter of 2014 through the third quarter of 2015 — barring a major crisis in Europe or a bond market price crash.
- Core inflation will hold around 1.8 percent.
- Unemployment will drop to 5.3 percent.
- If interest rates go up on the federal debt, the debt service could eventually double or triple. That will be an issue.
- Raising taxes and cutting expenditures is inevitable. We have to show a lot of courage in that area.
- There’s a 50 percent chance that a recession will come in 2016. The last recession officially ended in 2009, and seven years is a long time.
For more of Professor Beckenstein’s forecast, read “U.Va. Darden Professor Predicts a Smooth 2015, Then Bumps.”
These predictions were captured at the 2015 Economic Forecast gatherings held in January.
Professor Beckenstein teaches in Darden Executive Education’s The Executive Program: Strategic Leadership at the Top, which helps executives leverage their talents and emerge with the strategic expertise in leadership, thinking and influence necessary to command every level of business.