The U.S. economy has rebounded from the Great Recession and is showing signs of reasonable growth, according to Steven Deller, University of Wisconsin-Madison agricultural economics professor, who spoke Jan. 21 at the UW Ag Outlook Forum in Madison.
Deller said during 2016, the Gross Domestic Product is expected to grow at a respectable 2.6% rate. The historical average growth rate since 1947 has been 3.2%.
"The national economy has entered a period of sustained but modest economic growth," Deller said.
He predicts the national unemployment rate to drop to between 4.5% and 4.7% over the next two years.
"Since 1947, the average monthly unemployment rate has been 5.8%," he explained. "In Wisconsin, our unemployment rate is now 4.5% which is where we were at before the Great Recession. The unemployment rate ideally should be 4%, but at least it's going in the right direction."
Deller said the Wisconsin economy is in a weak recovery from the Great Recession.
"Job growth is below what we would expect given national growth rates and historical patterns. Unemployment rates are reasonable, but the number of discouraged workers remains an issue."
Deller said the inflation rate is expected to rise and then stabilize at about 2.2% in 2016.
"Since 1947, the average annual rate of inflation has been 3.6%. Therefore inflation is expected to remain modest for the foreseeable future," he said.
Deller said the chances of the U.S. economy returning to a recession during the next 12 months "is weak -- only about a 15% chance."
He said a major "structural" problem for the U.S economy and Wisconsin is the declining middle class or widening income inequality.
"Median household income in Wisconsin peaked in 1999 at $64,900 and is now only $57,800," Deller explained. "This is typical of many states in the U.S. It's a result of the hollowing out of the middle class. What this means for the economy's future is unclear which introduces uncertainty into the system."