NVI Technical College Information

Economic Feasibility

Those arguing that interest rates will return to previous behavior

It ’ s important to remember that job growth is likely to slow simply

point to the slowing of savings growth from China and the need for

because there aren ’ t enough workers. That means slowing

large investments (whether public or private) to reduce the impact

employment growth — if the unemployment rate remains low — is not

of climate change.

necessarily a signal of an economic downturn.

The Deloitte forecast assumes that long-term interest rates remain

Over the longer horizon, labor force growth slows to just 0.2% per

relatively high as demand for capital remains strong, while global

year, presenting continuing challenges for employers. It ’ s a

A

savings grow more slowly over the coming years.

demographic fact that employers will have to learn to live with.

Short-term rates play a smaller role in the long-term outlook, but a

Financial markets

larger role in the minds of people following financial markets. Our

The key question for financial markets over the next few years is

baseline forecast assumes one more Fed hike this year.

whether long-term interest rates will once again settle in at a

Then, with inflation slowing and the possibility of higher interest

relatively low level, or whether they will return to levels consistent

rates weakening the financial system, the Fed stops raising rates.

with the experience before the global financial crisis.

Given our relatively optimistic forecast for GDP and employment in

the baseline, the Fed does not start lowering the funds rate until late

Those arguing that interest rates will return to low levels point to

2025, and then gradually eases until it reaches 3.6%, which is our

fundamentals such as demographics (the aging global population)

estimate of the long-term neutral rate.

and slowing innovation growth.

Source: Deloitte

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