2016 Economic Outlook
Dennis A. Johnson, CFA
Chief Investment Officer
Points of View
 Fed achieves lift-off, future increase in interest rates will be data
dependent.
 U.S. real GDP growth is projected to be 2.4% in 2016 versus 2.5% in
2015.
 Consumer prices are projected to increase by 2.1% in 2016 compared
to inflation of 0.2% in 2015.
 Michigan’s economy is projected to continue to grow in 2016, but at a
more measured pace versus the last several years.
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Federal Reserve
U.S. Oil Production Starting to Ease
Figure 1
Fed Starts Climb From Zero
20
15
Fed Funds Rate, percent,
History
10
5
Forecast
0
'60
'70
'80
'90
Source: Federal Reserve, Comerica December 2015 Forecast
4
'00
'10
U.S. Oil Production Starting to Ease
Figure 3
Dollar Stays Strong in 2016
130
Forecast
125
120
Trade Weighted Dollar Broad Index,
History
115
110
105
100
95
90
2008
2009
2010
2011
2012
2013
2014
2015
Source: Federal Reserve, Comerica December 2015 Forecast
5
2016
2017
2018
U.S. Economy
7
8
9
10
11
Inflation
Source: Federal Reserve Bank of Dallas
13
14
15
16
U.S. Oil Production Starting to Ease
Figure 2
Wages Gains to Increase as U Rate Falls
10
8
Unemployment Rate, percent,
History
6
Forecast
Average Hourly Earnings, annpct
History
4
2
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Bureau of Labor Staistics, Comerica December 2015 Forecast
17
2017
2018
International Economics
Economic growth in the euro zone has stabilized
19
Canada is a mixed bag
20
Mexico’s economy hanging in their despite weak energy prices
21
India remains one of the fastest growing economies
22
Japan’s economic growth remains volatile
23
China’s government transitioning the foundation of their
economy for less volatile long-term growth
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Michigan Economy
Conclusion
 U.S. economy expected to perform relatively well in 2016.
 Inflations trends higher despite downward pressure from oil and the
impact of the strong U.S. dollar.
 Next rate hike by the Fed could occur at their March meeting.
 Economic growth in Michigan may begin to underperform the rest of the
U.S. due to the maturation of the current auto cycle and the impact of
the strong U.S. dollar on the manufacturing segment of the economy.
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Disclosure
Comerica’s Wealth Management team consists of various divisions of Comerica Bank, affiliates of
Comerica Bank including Comerica Bank & Trust, N.A., and subsidiaries of Comerica Bank including
World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc.
and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc.
are federally Registered Investment Advisors. Registrations do not imply a certain level of skill or
training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your
tax and legal advisors regarding your specific situation. Securities offered by Comerica Securities,
Inc. are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica
Bank or any of its affiliates, and are subject to investment risks, including possible loss of the
principal invested. Comerica Securities, Inc. is a broker/dealer, federally Registered Investment
Advisor, member FINRA/SIPC and subsidiary of Comerica Bank.
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