Ten Predictions For What 2016 Will Hold

WASHINGTON–The editors at WalletHub have released their list of 10 predictions for 2016. 

WalletHub is projecting:

1. U.S. GDP Growth Will Be Roughly 2.4%, Lagging the Worldwide Average of Roughly 3%.  The United States economy is widely expected to be characterized by slower growth during 2016, with the word “tepid” frequently being employed in the context of projections. This only makes sense, after all, considering that the U.S. has for years been at the vanguard of the recovery from the Great Recession and many economies are just now beginning to catch up, WalletHub said.
2. The U.S. Will Approach “Full Employment.” The U.S. unemployment fell significantly during 2015, dropping from 5.7% in January to 5.0% in November. This trend is expected to continue during 2016, though employment gains should begin to taper-off as we approach what many economists consider to be full employment, the company observed, acknowledging there is some small disagreement around what “full employment” means.
3. The S&P 500 Will End The Year At 2,188.  “2015 was a largely lost year for the stock market, with the S&P 500 entering January at 2,058 before dropping to 2,022 by mid-December amid chaos in energy markets and fears of a Fed rate hike,” WalletHub said. “The market is expected to recover modest gains by year’s end as fund managers strive to hit performance benchmarks, but that does not equate to a rosy outlook for the New Year – at least not immediately.”
4. U.S. Auto Sales Will Flirt With 18 Million. Nearly 16 million vehicles had been sold through November 2015 – 5.4% above 2014’s pace – and the total is projected to hit 17.3 million by year’s end. “Despite expectations for rising interest rates, the auto industry should continue to strengthen during 2016 as consumers replace their elderly fleet of vehicles, fueled by energy savings, employment gains and a desire to secure financing before it gets too expensive,” WalletHub is projecting.
5. Oil Prices Will Post A Modest Rebound.  “While market analysts foresee an inevitable slowdown in production as supply begins to overtake both short-term demand and long-term storage capacity, global energy market politics are signaling that things will get worse before they get better,” said WalletHub, pointing to one analyst’s prediction that 2016 will finish with oil at $40 to $45 a barrel.
6. The Fed Will Raise Rates Once In 2016, Bringing Its Median Target Rate to 0.625%. “We know that the Federal Reserve will increase its target federal funds rate slowly. Just how slowly remains to be seen, however, depending on the economy’s reaction to its first jolt from near-zero levels in more than nine years,” said WalletHub. “Members of the Federal Reserve project that the Fed’s target rate will conclude 2015 at 0.4% – which would be consistent with a 25-basis-point hike from the current range of 0% to 0.25% – before continuing to rise to 1.4% by the end of 2016.”
7. The Housing Market Will Be Marked By Slowed Growth, Higher Costs. “The real estate market has been solid in 2015, perhaps surprisingly so,” said WalletHub. “And although this recovery will continue to a certain extent in 2016, long-awaited headwinds should slow the pace of growth.”
8. Credit Availability Will Contract As Interest Rates & Defaults Rise. WalletHub noted the cheap credit “party might be winding down,” as the result of credit card debt returning to a pre-recession path, with consumers racking up $57.4 billion in credit card debt during 2014 and a projected $68.5 billion in 2015.
9. Medical Records Will Become An Increasingly Attractive Target For Identity Thieves Relative To Credit Info. “While consumer concerns remain focused on retail data breaches and payment card security…identity thieves seem to have largely moved on,” said WalletHub. “Healthcare data, in particular, appears to be a common target because it contains a wealth of personal information that can be used to file false insurance claims or serve as a building block for seemingly unrelated financial fraud in the future.”
10. Fannie & Freddie Will Say Farewell To FICO.  “Both government-sponsored enterprises base loan approval criteria on outdated versions of the FICO credit score released in 2004, which in turn means those are the scores used by most lenders,” said WalletHub. “Not only have credit scores come a long way in the past decade-plus in terms of their predictive capabilities, but the old models used by FICO don’t even generate a score for millions of people who may otherwise be able to qualify for a loan. That is why recent momentum in the push to modernize the pair’s approval guidelines is a positive development for consumers.”

The more complete WalletHub report can be found here https://wallethub.com/blog/2016-predictions/18005/