U-M economic forecast: jobs, vehicle sales up

• UM forecast: Vehicle sales of 16.6 mil in 2015, over 17 mil in 2016
• UM economists: At last, solid growth ahead for the nation

University of Michigan economists issued one of their most upbeat forecasts in years for the U.S. economy this morning, saying the nation will create more than 5 million new jobs over the next two years.

"We expect that 2015 will be the year when U.S. economic growth will finally accelerate meaningfully," said U-M economist Daniil Manaenkov in presenting his forecast in Ann Arbor.

The U-M forecast is based on the Michigan Quarterly Econometric Model of the U.S. economy and is widely watched by other economists, financial leaders, and businesses.

Of specific interest to Michiganders, the U-M forecasters said they see sales of motor vehicles hitting 16.3 million this year, 16.6 million in 2015, and more than 17 million in 2016 -- a very robust outlook.

The U-M team of economists will issue their Michigan-specific outlook Friday morning.

Other upbeat forecasts: Overall economic output growth as measured by the nation's Gross Domestic Product will jump from 2.2% this year to 3.1% in 2015 and 3.3% in 2016.

Last winter's severe weather crimped economic activity for a time, but even with that setback, job gains across the nation are on track for their best year since 1999. "And going forward, strong GDP growth supports steady employment gains," Manaenkov said.

In their annual forecast of the U.S. economy, Manaenkov and colleague Matthew Hall of the Research Seminar in Quantitative Economics in the U-M Department of Economics said that net creation of 10.3 million jobs from 2013 through 2016 will be the nation's best four-year stretch since 1997-2000. They foresee the national unemployment rate continuing to fall to 5.4% by the end of next year and to 5% by the end of 2016.

"We believe that growth is more than ready to accelerate," Manaenkov said. "The housing sector is on a more solid footing, well-positioned for growth. The unemployment rate dipped below 6% and is likely to keep falling, nudging higher wage growth. The industrial capacity utilization rate is close to normal, which bodes well for investment."

Gas prices, the economists say, should remain relatively stable as the price of oil holds steady around $79-$80 per barrel through 2016. In addition, both consumer price inflation and core inflation (CPI excluding food and energy) will stay below 2% through 2016.

In addition to GDP and employment growth over the next two years, the forecast calls for "a housing market poised to continue its long recovery from the depths of recession," despite slowly rising mortgage rates expected to hit 5% by the end of 2016 for 30-year conventional mortgages.

Contact John Gallagher at 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.