With a new year looming, the SIFMA Economic Advisory Roundtable released its forecast for 2016 this week, and the prospects for growth are tied closely to the machinations of the Federal Open Market Committee.
Despite a widely expected rise in the federal funds rate on Wednesday, the roundtable forecasts 2.5 percent in U.S. GDP growth next year with a return of inflation to the economic picture.
“The theme of the year is that slow and steady wins the race,” said the chairman of SIFMA’s Economic Roundtable, Ethan Harris, co-head of global economics research at Bank of America Merrill Lynch.
Harris sees as milestones being reached as the economy continues to get healthier.
“One of the milestones is full employment,” Harris said. “Another milestone is that we are finally going to get some inflation. This is a sign of a normalizing economy.”
That stands in stark contrast to Europe, which still faces deflation and slack employment.
Policy issues, the SIFMA roundtable said, could influence the economy, with respondents citing corporate tax reform as the issue that could have the most impact on the economy.
The biggest potential obstacle to economic growth was the impact of financial regulatory policy, with a large majority expecting a negative impact, just 14 percent expect no impact.
Harris noted that capital spending by businesses still lags, but is expected to increase in 2016 by 3.7 percent.