The region's 2016 economic outlook

It's December, which means it's time for economists to make their annual prognostications. And when making a forecast, it's always good to know where you have come from, so you can understand where you are going.

As far as the region's economy is concerned, if the past really is prologue, next year should be very good.

First, a look back at 2015. It was better, but not as strong as we would like to have seen it. The final numbers for this year will not be in for a while, but so far, economic growth has been good. That's not to say that we are hitting on all cylinders.

Take job growth, for example. It has been up, down, and all around the town. But when you smooth out the craziness, payroll gains have accelerated once again. Not only have the key education, health care, leisure, and hospitality sectors added workers, but we also are finally seeing some improvement in finance, trade, transportation, and utilities.

As usual, there are differences across the region. Two segments, the Montgomery-Bucks-Chester County and Camden metro areas posted solid increases that are approaching the national average.

On the other hand, the city of Philadelphia lagged, which is a surprise: Not only is construction starting to soar in Center City, but neighborhoods are being revitalized. I suspect that when all is said and done, the city will have played a key role in the strengthening of the labor market.

The improving jobs situation has translated into major reductions in unemployment. Jobless rates in portions of the Philadelphia Metropolitan Area are near or even below the national rate. The rate is below 4 percent in the Montgomery-Bucks-Chester segment, a warning sign that firms may have major problems finding workers to fill the growing number of openings. Only in Philadelphia is the unemployment rate high. But it has fallen steadily over the year, and real progress is being made.

Though 2015 was a good, though not great, year for the region's economy, significant progress was made.

2016: Is this the year the economy breaks out? For the first time in many decades, the larger, overarching economic trends are moving in the right direction.

I used to comment that we suffered from "negative serendipity," or that if something could go wrong, it would. Economic changes usually caused the major economic drivers in the region to falter. But that was then, and this is now.

Maybe the biggest economic trend affecting the region's growth is the demographic change of millennials taking over and baby boomers retiring.

On the millennials side, the desire for urban living is re-gentrifying cities, and Philadelphia and the surrounding areas are benefiting. The clearest indication is the improving housing market. Sales, especially in Philadelphia itself, are ramping up, and prices are beginning to follow.

The newfound attractiveness of the region to millennials is starting to reverse the pattern of local college graduates moving elsewhere to make their fortunes. Instead, many are now choosing Philadelphia to live and work. That will continue boosting the region's housing market going forward.

As for the boomers, they are finding that high-density, amenity-rich locations are great places in which to downsize. It's not just Center City that is attractive. Smaller towns, such as West Chester, Yardley, and Doylestown, as well as university communities are places seeing a growing demand for housing.

With boomers keeping their income right here and millennials providing a new vibrancy to the area, businesses are viewing the region in a totally different light: It is now a "hot" place to locate. And that trend should continue for a long time.

Put this all together, and the outlook is for the economy to strengthen even more in 2016.

And once Comcast opens its vertical research center, we could see growth match or even exceed the nation.

Wouldn't that be amazing?

jnaroff@phillynews.com