LAS VEGAS. The current U.S. economic expansion, now 67 months old, will continue through 2015 and with it continued growth in trucking's economic activity, according to economist Dr. Bob Dieli of RDLB Inc. Bill Strauss, senior economist at the Federal Reserve Bank of Chicago, seconded that forecast when he joined Dieli on a panel opening the Heavy Duty Aftermarket Dialogue conference. With gross domestic production (GDP) exceeding 2.5% this year, Strauss said he looked for that econonic indicator to continue "above trend growth" to just under 3% this year and move above 3% in 2016
Also bolstering the continued expansion view, both economists indicated that the Federal Reserve might finally be ready to raise the benchmark Federal Funds interest rate, which has been held at 0% since 2009 to spark growth. Based on recent statements by the Fed, Dieli said "they are putting us on notice," and forecast that "major changes in fiscal and monetary policy are possible in the near term."
With the Federal Reserve meeting in Washington, D.C., this week to discuss policy, Strauss said a blackout period restricted him from making direct comments. But, he told the audience, "Keep in mind that 0% is not normal, and we should be happy when they raise it because that means the economy is self-sustaining and doesn't need training wheels."
Comparing inflation to blood pressure, Dieli said the Federal Reserve considers 2% a year a healthy rate "that isn't so high it causes a stroke or so low it causes kidney failure." Inflation is currently running at around 1% and should grow slowly to about 3.75% by 2017, according to Strauss.
Asked if the sudden 50% drop in oil prices could derail the current expansion, Dieli said he believed just the opposite. "It will help extend the expansion," he said. "It's the most effective tax cut possible because it immediately gives everyone more money to spend."