This month’s letter is in two parts. In Part I, Bill Longbrake provides his final assessment of “hits” and “misses” on his 2017 forecasts. There were a lot of misses, which is a reminder that domestic and international economic and political dynamics can and usually do change dramatically over the course of a single year. Nonetheless, Bill takes a crack in the second section of Part I to summarize expectations for economic activity in 2018, which promises to be a very good year.
However, given that forecasts grow stale quickly and that the course of events can change economic outcomes, sometimes substantially, in Part II Bill provides a 10-year outlook for several key economic variable for four different scenarios. The “BASE” scenario reflects steady growth, but incorporates the demographic impact of slowing employment. Outcomes in other scenarios are not forecasts but rather show what could happen should the economy overheat, should recession occur, or should productivity remain extremely weak.
In next month’s letter, Bill intends to discuss accumulating economic imbalances and to examine significant risks that could alter the U.S. and international outlooks for the worse, if not in 2018, in the not too distant future.