Interest rates are likely to go up, oil prices are likely to increase a bit and then stabilize, and the overall U.S. economy is fairly strong – provided the federal government stops being dysfunctional.

That was the word from Gregory Miller, the chief economist at SunTrust Bank, at the Chapel Hill-Carrboro Chamber of Commerce’s annual Economic Outlook Briefing Thursday morning.

The big concern right now: will the Fed raise interest rates? This month officials dropped the word “patience” in their report, which signals a possible increase around June. Some economists worry that could slow economic growth, but Miller says it’s important to remember that interest rates are historically low right now.

“Rising rates are not the same as high rates,” he says. “We have a long, long way to go to get to high interest rates.”

And he says a hike in interest rates could actually boost the economy in the short term – since it’ll lead investors to borrow money quickly, to avoid higher rates in the future.

Generally speaking, Miller says the overall U.S. economy is doing well – especially relative to the rest of the world. That means a strong dollar, which means lower prices for Americans at the stores.

Miller says the American economy is growing at a rate of about 2.4 percent. Economists say a 3-percent growth rate is needed to keep up with increasing job demands – but Miller says the private sector is actually already doing that well. What’s holding the economy back? He says the federal government is simply failing to pull its weight.

“The government’s started to come back,” he says. “State and local governments are already back – the federal government is the only one that’s (still) moving in the wrong direction.

“We suspect that through this year, the (federal) government should start to make a positive contribution to growth. If they do that, then the whole economy (will be) doing 3 percent – and everybody’s happy.”

Miller delivered his economic outlook briefing to a group of about 200 local business leaders and elected officials Thursday at the Friday Center. It was an optimistic outlook, in general – but he did say the positive trends could be jeopardized by increasing instability.

That could come globally if there is conflict or if other national economies collapse – or it could come domestically, when election season rolls around next year.

“When we are headed toward elections, the markets and the economy tend to turn uncertain,” Miller says.

So expect a possible slowdown next year – but until then, Miller says the overall picture is good.

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