Outlook 2016

View the Complete LPL Outlook 2016

Our view is that the U.S. economy — as measured by real gross domestic product (GDP) — is likely to post growth of 2.5 – 3.0% in 2016, below its post-World War II average of 3.2%, but above the 2 – 2.5% average growth rate seen in the first six-and-a-half years of this expansion, based on the factors discussed below. Despite the length of the current expansion (already the fourth longest on record), it has not followed what would be considered a routine path. Supportive monetary policy from the Federal Reserve (Fed) has remained in place throughout the expansion; economic growth, while steady, has been below trend; and inflation, which often picks up near the middle of the cycle, remains near cycle lows. While we believe we are likely in the second half of the economic cycle, 2016 may be the first typical mid-cycle year of the expansion, and investors may need to figure out what it means to get back to that routine.