Morgan Stanley released its economic outlook for 2015 this week, and it’s an optimistic one.

Spending Growth
The foundation of much of the expected improvement to the economy is a stronger consumer. Morgan Stanley expects a 2.8 percent growth in real consumer spending next year, making 2015 the strongest year for the consumer since 2006.

Morgan Stanley predicts the strong capital spending that drove growth in the second half of 2014 will carry over into the first half of 2015 before cooling off in the second half of the year. Despite the risk that low oil prices will dampen energy-related capex, steady growth of U.S. commercial construction outside of the energy sector should pick up the slack, the organization said.

After a weak five-year period, business formations are now undergoing a strong rebound, growing at an annual rate of 3 percent over the first three quarters of 2014.

Morgan Stanley also notes that a shifting focus from internal capex spending to external mergers and acquisitions (M&A) will likely continue in 2015.

Housing
The picture is not all rosy, though.

Analysts believe that home ownership rates will continue to fall due to the tight mortgage credit environment. The economic silver lining to a weak housing market, however, is the potential for a ramp-up in apartment building construction in 2015.

Rental vacancy rates dropped to a 20-year low in 2014.

Fiscal Policy
Analysts also predict government spending will no longer be a drag on the U.S. economy next year.

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