I am always reluctant to offer predictions for the year ahead because of the arrogance involved. But, shoot, as in the gallows humor of the Eighth Air Force, “No guts, no Air Medals.” Begin with reviewing successes and embarrassments one year ago. Two mistakes: I thought the US economy would accelerate to 3 percent growth, and saw Czar Vladimir as more dangerous than he has been. Got right: The US federal government has been inert in 2015, Europe and Japan are still no-growth messes, China did slow down, the Fed did lift off from zero, but mortgage rates ended where they began.
- The Fed says it’s going to raise the overnight cost of money by about 1 percent per year for the next three years.
- Mortgages in 2015 never rose above 4.25 percent nor fell below 3.75 percent; in 2016, the high-low range should be twice that.
- Every day the US is more sensitive to overseas economies.