Unemployment is low, people have more disposable income, and consumers are borrowing more for purchases. At the same time, people are taking vacations, staying in hotels, and buying automobiles.
“All of these discretionary purchases are happening because we feel good,” Elliott Eisenberg, an economist with GraphsandLaughs LLC, said during an economic update at the CUNA Lending Council Conference Wednesday in Las Vegas.
All of this is helping to fuel the economy.
The economy is growing at roughly 2% per year, and Eisenberg says he expects that to continue for the next three to four years unless something drastic happens. This is the same rate the economy has been growing at for the previous seven or eight years.
He says interest rates will continue to rise slowly, and the federal funds rate is not expected to surpass 3% until at least 2020.
But while consumers are feeling confident in the economy, other areas—such as energy prices, exports, inflation, corporate consumption, and housing inventory—continue to lag and affect the economy’s growth.
But Eisenberg believes a recession is unlikely, saying there’s a 25% chance of one happening soon.
He also notes that just because the last recession was seven or eight years ago, people should not believe another recession will happen soon.
“The economy is OK,” Eisenberg says.