MarketWatch (12/28/15) Greg Robb

Economists forecast gross domestic product will grow in 2016 at a 2.6% rate, the fastest pace since 2006, according to a survey of economists compiled by the Federal Reserve Bank of Philadelphia. However, a new study by Goldman Sachs economists David Mericle and Daan Struyven points out that economists in the Philadelphia Fed Survey of Professional Forecasters have been overly optimistic about growth in 13 out of the last 16 years since 2000. At the start of 2015, for example, most forecasters, including Goldman, expected real GDP to accelerate to approximately 3% this year, but they have since lowered that approximation to 2.3%.

Goldman says most economists have not marked down the economy’s long-run speed limit given demographic and structural shifts, which could contribute to the trend of overestimated growth.

Conference Board News Release (12/29/15)

The Conference Board Consumer Confidence Index, which had decreased moderately in November, improved in December. The index now stands at 96.5, up from 92.6 in November. The Present Situation Index increased from 110.9 in November to 115.3 in December, while the Expectations Index improved from 80.4 in November to 83.9 in December.

“Consumer confidence improved in December, following a moderate decrease in November,” says Lynn Franco, director of economic indicators at the Conference Board. “As 2015 draws to a close, consumers’ assessment of the current state of the economy remains positive, particularly their assessment of the job market. Looking ahead to 2016, consumers are expecting little change in both business conditions and the labor market.”

The proportion of consumers claiming jobs are “plentiful” increased from 21.0% to 24.1%, while those claiming jobs are “hard to get” decreased from 25.8% to 24.7%.

Federal Reserve Bank of Dallas (12/28/2015)

Texas factory activity increased for a third month in a row in December, according to the Federal Reserve Bank of Dallas. The production index rose from 5.2 to 13.4, indicating stronger growth in output. The capacity utilization and shipments indexes posted their fourth positive readings in a row and inched up to 7.8 and 7.6, respectively. However, the survey’s demand measures showed continued weakness. New orders, an indicator of incoming demand, declined at a faster pace. The index has been below zero for five months and fell to -8.9 in December. The growth rate of orders index has been negative for more than a year and dipped seven points to -14.3 this month.

Labor market indicators reflected a notable rise in December. The employment index inched up further to 12.8; 26% of firms noted net hiring, while 14% noted net layoffs. The hours worked index suggested longer workweeks and rose to 15.2, its highest level since May 2010.