The pace of growth in the U.S. economy is slow and steady and shows no signs of falling into a recession for the next 12 to 18 months.
"The chariot is being pulled by ponies, but it is still going to last for a long time and still going to gallop at a reasonable pace," said Mekael Teshome, an economist with PNC Financial Services Group.
PNC Bank economist Mekael Teshome gives his 2018 economic forecast for Toledo and northwest Ohio.
Mr. Teshome was one of the featured speakers Wednesday at the Pittsburgh bank's annual economic forecast luncheon at The Pinnacle in Maumee. PNC has several branches in northwest Ohio.
He said he expects the economy to continue to grow in the coming year and for Toledo to benefit from that momentum. He is predicting U.S. GDP growth of 2.6 percent this year, up from a realized 2.3 percent in 2016.
"We believe that 2018 will be a better year for the U.S. and also for the Toledo economy," he said.
Employment growth in the Toledo area, he said, is predicted to increase by 1 percent next year, with employment opportunities to be in health care, business and professional services, and education.
"We will continue to transition away from the traditional manufacturing-driven employment to more service-driven [jobs]," he said.
In reviewing the health of the national economy in 2017 through the third quarter, Mr. Teshome said the 2.3 percent increase in U.S. gross domestic product and overall job growth of 1.5 percent is on track for what he expected in his 2016 forecast.
The three, 0.25 percent rate hikes in the prime interest rate by the Federal Reserve Board are in line with the economist's expectations.
"What we didn't expect was that the job market would get tighter than what it already was last year," he said.
September's unemployment rate of 4.2 percent is quite low by historic standards, he added.
The current trend this year to have a 2 percent inflation rate also came as a surprise, said Mr. Teshome, adding that reductions in cell phone data plans and pharmaceutical drug prices helped drive down inflation.
"When the unemployment rate falls, usually inflation picks up and wages pick up. But that didn’t quite happen as we thought it would. Wage growth is improving, just not as much as we thought it would," he explained.
In the Toledo area, he said job growth was predicted to drop in 2017 following healthy increases in 2015 and 2016, but instead increased.
"We have continued to grow, but at a slower rate than we thought the economy would," he said.