CHERRY HILL, N.J., March 24, 2015 /PRNewswire/ -- Consumers are set
to take the lead in pushing forward American economic growth,
according to a new report by TD Economics (www.td.com/economics),
an affiliate of TD Bank, America's Most Convenient
Bank®.
"With job growth at its highest rate in 15 years and gasoline
prices at the lowest in six years, conditions couldn't be better
for household spending," says TD Bank's Chief Economist,
Craig Alexander. "Increases in real
purchasing power give households the ability to increase spending
while still meeting their saving goals."
From 2.4% in 2014, TD Economics projects economic growth of 3.0%
in 2015 and 2.8% in 2016. The unemployment rate is expected to fall
to 5.1% by the end of 2015, from its current level of 5.5%.
Jobs, jobs, jobs
The job market offers the best
reason for optimism over the next year. More than 3.2 million jobs
were created in 2014, the highest annual gain since 1999.
Employment growth has continued to surprise to the upside – over
1.2 million jobs were created in the last four months
alone.
"The strength in job growth is echoed in a significant rise in
the number of job openings, new hires, and quits," says Alexander.
"The increase in labor market turnover implies a strong foundation
for future job growth. Rising confidence stretches from employers
who are more willing to take a chance on new hires to employees who
are increasingly willing to look for new opportunities."
The improvement in job growth, in combination with falling
inflation, has led to a strong acceleration in income growth.
Inflation-adjusted disposable income rose 4.2% year-over-year in
January. "This is likely to continue over the remainder of this
year, keeping the fire lit under spending growth," says
Alexander.
The American economy is in a league of its own
The
strong prospects for domestic spending set America apart from the
rest of the world. Among advanced economies, only
commodity-producing countries like Canada and Australia have kept pace with the United States. With the plunge in prices,
the lead pack is thinning.
"The good news is that economic prospects in Europe have turned up, aided by plunging
energy prices, a falling currency and continued support from the
European Central Bank," says Alexander. "Still, economic growth in
Europe will pale in comparison to
the United States."
Unfortunately, the good news stories are few and far between
elsewhere in the world. In both Asia and South
America, growth is set to decelerate over the next year. In
fact, China will continue to slow
over the next several years, as policy makers reconfigure their
economic growth model and try stem imbalances.
"With little in the way of faster global growth outside of
the United States, exports have
limited upside. At the same time, the close to 20% rise in the
trade-weighted dollar will mean higher imports from abroad,"
Alexander said. "This is good news for the rest of the world, but
will mean a challenging environment for the nation's
exporters."
The Fed is in no rush to tighten policy
The
improvement in economic growth and strength in job creation mean
that the Federal Reserve is moving closer to raising interest
rates. However, with soft inflation and the headwind from the
dollar, the Fed will be measured in its approach. "The key message
that came from the Fed's last meeting was that even as the Fed
begins moving rates upward, they will not go quickly," says
Alexander.
TD Economics expects the first hike in the fed funds rate to
come in September, with rates settling at 0.75% by the end of this
year and 1.25% by the end of 2016.
The complete findings of the TD Economics report are available
online at
http://www.td.com/document/PDF/economics/qef/qefmar2015_us.pdf
About TD Bank, America's Most Convenient
Bank®
TD Bank, America's Most Convenient Bank,
is one of the 10 largest banks in the U.S., providing more than 8
million customers with a full range of retail, small business and
commercial banking products and services at approximately 1,300
convenient locations throughout the Northeast, Mid-Atlantic, Metro
D.C., the Carolinas and Florida.
In addition, TD Bank and its subsidiaries offer customized private
banking and wealth management services through TD
Wealth®, and vehicle financing and dealer commercial
services through TD Auto Finance. TD Bank is headquartered in
Cherry Hill, N.J. To learn more,
visit www.tdbank.com. Find TD Bank on Facebook at
www.facebook.com/TDBank and on Twitter at
www.twitter.com/TDBank_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank
Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services
company in North America. The
Toronto-Dominion Bank trades on the New
York and Toronto stock
exchanges under the ticker symbol "TD". To learn more, visit
www.td.com.
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SOURCE TD Bank