Economic Outlook from Comerica Bank

ECONOMIC UPDATE…
Robert Dye, Ph.D., Chief Economist at Comerica Bank provided his outlook for the U. S. Economy yesterday morning:

 U.S. will emerge from the 2012 election with a plan and mandate for federal budget reform.
 Unemployment rate will steadily decrease to below 8% at year-end but
not for a good reason; unemployment will lower because more people stop looking for work.
 Europe will continue to muddle through its banking and financial situation, avoiding a crisis. European economies will slow.
 Oil prices are currently at a “bubble” and will come down as the world economy does not pick up steam. Exception would be if Iran interferes with oil shipping through the Straight of Hormuz. The world is awash in hydrocarbons. Plentiful natural gas has changed the global energy market. However, Dr. Dye still predicts $100 per barrel oil for the year and $105 per barrel crude in 2013.
 Beginning of 2012 will be more volatile, economic growth will be choppy, and financial markets will continue to be choppy. Economic improvement will gain greater footing towards the end of 2012.
 Housing prices at year-end will have achieved stability in most parts of the country.
 By late 2012, consumers and the economy will feel more stable or “normal” heading into 2013. Going into 2013, consumers will feel more secure in satisfying pent-up demand for autos and for housing.

Here are Comerica’s projections:

 GDP growth: 2.4% in 2012, and 2.8% in 2013.
 Consumer Price Index (inflation): 2.2% up in 2012, and 1.9% in 2013.
 Housing starts will increase in 2013 from 676,000 homes in 2012 to 730,000 homes in 2013.
 Interest rates will remain low. Thirty-year mortgage rate was 4.16% in 2011, will fall to 3.52% in 2012, and go up slightly to 4.05% in 2013.