U.S. economy should strengthen but oil drag to continue through 2016

The U.S. economy should strengthen as the year goes on, despite lower oil prices, and that should translate into better corporate profits and higher stock prices.

That’s the economic and investment outlook from two top Comerica Inc. officials who spoke Wednesday in Fort Worth.

Robert Dye, chief economist at the Dallas-based bank, said gross domestic product growth, which sank to 1.4 percent in the fourth quarter, should move back to the 2-to-2.5 percent range in the second half of 2016, and the U.S. unemployment could fall as low as 4.5 percent.

Meanwhile, investors can expect stock prices to continue to move higher this year, though increased market volatility will bring more ups and downs, said Dennis Johnson, Comerica’s chief investment officer.

Dye expects oil prices to remain relatively weak, perhaps rising to the $40-$50 range by year’s end. But the increasingly diversified Dallas-Fort Worth economy will continue to weather the energy downturn, with population growth fueling job growth in areas such as healthcare and services.

“This isn’t the tumbleweed economy that dries up and blows away when oil prices go down,” Dye said, compared to the oil bust of the 1980s.

Still, low oil prices will continue to put stress on the industry, Dye said, and soften local economic growth and home price advances as 2016 proceeds.

“Hopefully, the worst is behind us,” Dye said. “This is going to be with us into next year.”

Also, job growth on the Fort Worth side of the Metroplex will continue to be weaker than on the Dallas side due to a bigger exposure to the oil and gas industry, he said.

This story was originally published April 6, 2016 at 4:20 PM with the headline "U.S. economy should strengthen but oil drag to continue through 2016."