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Robert A Dye PhD Chief Economist Comerica Bank
November 2017
The Comerica US Economic Outlook
The US Business Cycle Heading Into Extra Innings
2
US Business Cycles Since 1854
0
20
40
60
80
100
120
140Duration in Months from Trough to Peak
Source National Bureau of Economic Research
Average 387 Months
1960s
1990s
1980s
3
Positives and Negatives Everything Cuts Both Ways
Synchronized Global Expansion Asian Debt Overhang
Strong Labor Market Profit Squeeze from Rising Wages Falling Value of Dollar Higher Import Prices
Low Interest Rates Rising Interest Rates
Consumer Confidence Millennials Shut Out of Housing
Strong Business Confidence High Stock Market ValuationsLow Energy Prices Low Energy Prices
Manufacturing Renaissance Auto Sales Cycle
The Trump Bump A Post-Bump Slump
Hurricanes Rebuilding
4
GDP Forecast Ongoing Moderate Expansion Weighing the Trump Bump
-9
-7
-5
-3
-1
1
3
5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
US Real GDP Growth Annualized Percent Change
History Forecast
Sources BEA Comerica Bank
-03 -28 25 16 22 17 26 29 15 23 29
5
October Job Growth Bounced Back After Hurricanes
4
5
6
7
8
9
10
-800
-600
-400
-200
0
200
400
07 08 09 10 11 12 13 14 15 16 17 18
+261k in October U Rate Down to 41 Percent
ForecastPayroll Employment avg monthly diff ths (L)
Unemployment Rate percent (R)
Sources BLS Comerica Bank
6
More Upward Pressure on Wages to Come
0
2
4
6
8
10
12
90 92 94 96 98 00 02 04 06 08 10 12 14 16
Unemployment Rate and Hourly Earnings
Unemployment Rate
Average Hourly Earnings percent change year ago
Source BLS
7
Fed Ponders Inflation
-2-10123456
07 08 09 10 11 12 13 14 15 16 17
Consumer Price Index pchya
Consumer Price Index pchya (L)
Source BLS
Core CPI pchya (L)
8
Interest Rate Outlook Low Inflation Brings Downside Risk
01234567
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Yield percent
Fed Funds
10-Year Treasury Bond
Sources Federal Reserve Comerica Bank
30-Year FRM