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E xchange Rates Second, business investment continues to contract. Historically business investment would recover with growing consumer demand. But the world continues to have excess capacity in most industries. Business confidence in the future was also shaken by the severe recession in 2009. As a result, business investment continued to contract over the last year despite healthy balance sheets, but should improve in 2017 with sustained growth in consumer spending. Now for the Good News: No Recession on the Horizon This slower growth has forced most economic observers, including the Federal Reserve, to revise their expectations of U.S. growth. Because of slower productivity growth and weak growth in the rest of the world, the Federal Reserve has revised their view of trend growth down to 2%. The revised view of trend growth and the productivity trend has major implications for interest rates. Two years ago, the Federal Reserve thought they would have to push short-term rates up to 3.5% to stabilize growth and keep inflation near 2%. The Federal Reserve now believes that an interest rate of 2-2.5% by 2018 will be sufficient. Long-term interest rates are not expected to increase that much either because of international capital flows. So, your financing costs are not likely to increase much over the next few years. 20 PalletCentral • September-October 2016 palletcentral.com ECONOMY Industrial production for manufactured goods is expected to grow again, but only 1-2%.