2015 was a good year for the US economy, and it looks like this upward trend is likely to continue throughout 2016. The International Monetary Fund has reported a projected gross domestic product growth of 2.8 percent (up from 2.6 percent in 2015), leading statisticians to predict that America will continue to outperform other leading First World nations in the fiscal year to come. Here are five indicators that 2016 will be at least as good as 2015 from a financial perspective â€“ and maybe even better.
Interest Rates Are Up
On December 16, 2015, the Federal Reserve raised its key interest rate for the first time in nearly a decade. While the rate hike was relatively minor (from a range of 0 percent to 0.25 percent to a range of 0.25 percent to 0.5 percent), it was a sign of how much the economy has recovered from the Great Recession of 2008 â€“ and a real indication that low unemployment and stable inflation are once again within reach.
American Debt Is Shrinking
According to Nasdaq, the percentage of Americans with revolving credit card debt has been steadily shrinking â€“Â from 44 percent in 2009 to 34 percent in 2014. Less debt per household enables the average consumer to bridge a cash crunch when necessary. On a similar note, FICO reported in August 2015 that US consumer credit scores are inching upward, with the national average at an all-time high of 695. Lower debt and higher credit scores both point to fiscal responsibility on a consumer level, which bodes well for the US economy in 2016.
Oil Prices Are Still Low
One of the greatest boons of 2015 was lower gas prices, and this month the US Energy Information Administration is predicting an average retail price of $2.06 per gallon for regular grade gasoline and $2.52 per gallon for diesel fuel (including taxes). Not only are lower gas prices great for car owners, but they also have a positive trickle-down effect on everything from airline travel to the retail industry.
Wages Are Increasing
Last year saw a spike in minimum wage increases across several cities, reflecting the Pew Research Centerâ€™s 2015 report that 73 percent of Americans are in favor of raising the federal minimum wage from $7.25 an hour to $10.10 an hour. Cities that have already scheduled minimum wage bumps for 2016 include Berkeley, San Francisco and Washington, D.C. Not only do these increases point to a stronger economy in 2016, but they also have potential to improve the living conditions of the 3.6 million workers who, according to the US Bureau of Labor Statistics, make minimum wageÂ or less.
More Millennials Are Buying Homes
The US housing market experienced serious growth in 2015, with a significant portion of buyers between the ages of 25 and 34. According to a study by Realtor.com, 2015 saw millennials having the highest share of mortgages in cities such as Des Moines, Pittsburgh and New Orleans. The fact that more millennials are buying homes is a sign of improving economic conditions, and will likely lead to a chain reaction of spending across the home improvement, home furnishings and personal electronics sectors in the New Year.