The Fed, meanwhile, continues to lurk in the background. Wilmington’s seven-year forecast had the theme “The Fed step back, America steps up.”
The forecast said liquidity would be gradually drained from the global financial system, as the Federal Reserve and other central banks reverse or unwind unprecedented stimulus programs.
In coming years, American manufacturing will enjoy a renaissance, driven by lower energy and labor costs relative to other countriesk, according to Wilmington. However, the labor market will remain soft as technology is increasingly deployed to increase production.
Wilmington expects the yield on the 10-year U.S. Treasury note to rise to 4.4 percent from its current 2.8 percent. The U.S. annual inflation rate will be 2.1 percent to 2.2 percent.
The American economy would grow at an annual rate of 3.2 percent, compared with 1.1 percent since the onset of the recession. In contrast, developed international economic growth will be 2.2 percent—4 percent for emerging markets, according to Wilmington.