Outlook and Market Review - First Quarter 2016


The U.S. economy grew at a 0.8% annual rate in the first quarter according to the second estimate of the Bureau of Economic Analysis. U.S. economic growth in the fourth quarter of 2015 was revised upward to 1.4%. Much stronger growth will be needed for the remainder of the year to come close to the revised consensus forecasts of 2% growth for 2016. Expansionary fiscal policy is off the table due to overuse of deficits in the past and growth of national public debt to over 19 trillion dollars. Monetary policy remains easy with the Fed Fund rate well below a normal rate of about 1% for current conditions, as explained in the Fourth Quarter 2015 Outlook. Relatively weak jobs data combined with dismal growth data make it unlikely that the Fed will raise short term rates in June.