The July 2017 R/ECON forecast for New Jersey leans on IHS Markit’s national baseline forecast of June 2017. The U.S. forecast, to which IHS assigns a 60 percent probability of occurring, shows the country continuing to expand modestly through 2026. Compared to the forecast reported in our prior report (R/ECON November 2016), the nation’s outlook for employment and output has weakened slightly over the long term.
The main risk to the IHS forecast is political and fiscal uncertainty tied to Washington’s inability to advance initiatives for healthcare reform, tax reform and infrastructure. Continued gridlock would lead to less confidence from consumers and business alike with respect to any promises made by the new administration. Also changes in trade agreements, but especially any involving China, could cause economic conditions in trading-partner countries to sag. In turn, problems in emerging U.S. markets would likely worsen, and the dollar would strengthen, thereby causing U.S. export volumes to slacken. Of course, all of this could be more than offset by larger-than-expected corporate tax breaks and an unexpected burst in investment that encourages the adoption of new technologies and improved infrastructure, both of which could lead to welcome enhancements in productivity.