WEST CHESTER, PA (TheStreet) -- The U.S. economy is on a roll. Real GDP is expanding at a 3% pace, which is producing a prodigious 3 million jobs a year. Unemployment is falling rapidly, at more than a percentage point per year.

If this growth is sustained, the economy will be back to full employment by mid-2016. The last time the economy was operating flat-out was nearly a decade ago.

Prospects are good that it will be, as household spending powers growth. More and better quality jobs, low debt service burdens, record high stock prices and rising housing values, and the plunge in gasoline prices are significant tailwinds to consumer spending. Stronger wage growth, which seems imminent, will make the winds blow even harder.

Housing demand will also steadily build. Mortgage rates are back close to record lows and are set to fall further as the Federal Housing Administration plans to cut its insurance premiums, which should provide incentive for cautious first-time homebuyers. Fannie Mae and Freddie Mac have also made some changes that should encourage lenders to extend more mortgage loans.

There are constraints on growth, most notable being the deteriorating trade balance and cutbacks in investment in the heretofore booming energy industry. The Federal Reserve must also gracefully begin to raise interest rates as the economy closes in on full employment. But these constraints won't be binding.

Financial Firepower

Households have plenty of financial firepower to step up their spending. Real household cash flow, which largely includes after-tax income, debt payments, and capital gains realizations, is posting its strongest gains since before the recession.

The plunge in oil prices is providing an enormous boost. If prices remain near their current $50 per barrel this year, U.S. households will save a whopping $150 billion on their gasoline bills. This is more than 1% of disposable income. At $70 per barrel, the Moody's Analytics baseline, the savings would be a still-impressive $90 billion, equal to 0.7% of disposable income.

Low-income households, which spend a higher share of their income on gasoline, will benefit the most, particularly in the Southeast, where people drive more. High-income households in the Northeast benefit the least.

Click through for a complete economic outlook for 2015. Read Mark on Moody's Analytics Dismal Scientist.

A Low Debt Service Burden

Households are also shelling out less of their income to service their debts. The debt service burden-the share of after-tax income households must pay on their debts to avoid delinquency-is about as low as it has been in the data available since 1980.

And delinquency is very low. The delinquency rate for non-mortgage household debts, which includes everything from credit cards to student loans, is about as low as it has ever been. Mortgage delinquency is higher, still reflecting the poor lending during the housing bubble, but it is falling fast as recent lending is pristine.

Capital gains realizations are also increasing quickly with the surging stock market and firmer housing market. Although the data are lagged, realized gains likely rose to a record high last year.

Households will be in even better financial shape once wage growth meaningfully picks up. Despite the tightening job market, wage gains have hardly budged, increasing at no more than the pace of inflation expectations.

Wage setting may also be impacted, at least for a while, by the collapse in oil prices, which is weighing on inflation expectations. A disproportionate number of businesses make wage and price decisions for the year at the start of the year. The lower oil prices and inflation expectations could color those decisions.

Nonetheless, a pickup in wage growth appears imminent. The quit rate-the number of workers leaving their jobs as a percent of the labor force and a sensitive barometer of the tautness of the job market-has increased significantly in recent months. Historically, changes in the quit rate presage changes in the pace of wage growth six to nine months hence. The current quit rate suggests wage growth will accelerate by nearly a percentage point by this time next year.

As well as the economy is performing, it would be doing much better if the housing recovery restarted. Activity in the single-family housing market stalled out more than a year ago, held back by an unfortunate combination of factors. The most fundamental problem for single-family housing has been the dearth of first-time homebuyers. The lack of first-timers makes it difficult for trade-up buyers to sell their homes, ultimately hurting sales of new homes and single-family construction.

According to the National Association of Realtors' profile of homebuyers and sellers, only one-third of sales of primary residences in 2014 went to first-timers. This compares with a peak of one-half of sales in 2010, and an average of closer to 40% of sales since the turn of the century.
Demographics haven't been helpful. Most households purchase their first home when they are in their late 30s, and given the bad economy, they may have pushed this off to their early 40s. The population of those between the ages of 35 and 44 has declined by more than 5 million or 10% since peaking in 2000.

Click through for a complete economic outlook for 2015. Read Mark on Moody's Analytics Dismal Scientist.

Tight Credit Standards

Extraordinarily tight mortgage credit standards have been tough on all homebuyers, but especially first-timers. The nation's largest bank mortgage lenders, which historically have dominated the mortgage lending business, have been particularly cautious in their lending as they scale back their operations. These systemically important banks are grappling with higher capital and liquidity standards, significant changes to lending and servicing regulations, and large legal, regulatory and reputational costs of their lending during the housing bubble.

Smaller non-bank financial institutions are stepping up their mortgage lending to fill the void left by the large bank lenders, but it is taking time, and mortgage loans remain tough to get. This is especially true for those with lower credit scores or thin credit files, like many first-timers.

Housing Policy Response

Policymakers appear to recognize the importance of getting the housing recovery back on track, and are thus focused on increasing the availability of mortgage credit and lowering mortgage rates, particularly for first-timers.

The FHA's recent decision to reduce its mortgage insurance premiums by half a percentage point will provide a meaningful boost. Since the housing market bottomed out in 2011, the FHA has provided approximately 500,000 loans to first-time homebuyers per year, accounting for one-third of all their home purchases.

Well over three-fourths of the purchase loans insured by the FHA during the housing recovery have been for first-timers.

The FHA is currently charging record premiums to shore up its shaky finances. It has worked, as the FHA's insurance fund is back in the black and prospects are good that it will be well-capitalized within a few years, even with the new lower premiums.

Also notable is the decision by the Federal Housing Finance Agency to allow Fannie Mae and Freddie Mac to purchase certain mortgage loans with only a 3% down payment. The loans will go only to lower-income borrowers who live in the home, and if purchased by Fannie Mae, the borrower must also be a first-time homebuyer.

Another Positive

FHFA's work to clarify the government-sponsored enterprises' representation and warranty process is also a positive. When a lender originates a loan that is guaranteed by Fannie or Freddie or insured by the FHA, it makes a set of commitments affirming that it has complied with the underwriting guidelines established by the government guarantors. If it is later determined that the loan did not comply with these reps and warranties, the guarantors can require the lender to take back financial responsibility for it.

Lenders recognize there was a lot of egregious lending during the housing bubble, but they also feel that the rep and warranty guidelines and their implementation were unclear. Precisely when lenders' responsibility for the credit risk in the mortgage loans they originated transferred to Fannie, Freddie and the FHA was fuzzy.

FHFA and the GSEs have responded to these concerns, changing and clarifying their guidelines. This appears to have eased lenders' concerns over buybacks on loans that eventually get into trouble. This should soon encourage an easing in underwriting standards and more new lending.

Click through for a complete economic outlook for 2015. Read Mark on Moody's Analytics Dismal Scientist.

Worries Remain

There are things to worry about, including the nation's deteriorating trade balance. A soft global economy and the soaring value of the dollar will take a bite out of exports and juice up imports. U.S. manufacturers will feel a pinch.

Business investment also looks sluggish. Energy companies and their suppliers will surely curtail investment, and other businesses remain cautious. The pall over business confidence created by Washington's budget battles has lifted with the government's better fiscal condition and a tentative truce among policymakers. But this has yet to translate into stronger business spending.

The Federal Reserve must also gracefully begin to raise interest rates as the economy closes in on full employment. If done well, the better job market will trump the ill effects of the higher rates on housing and business investment. The Fed has the tools, the experience and the fortitude to pull this off, but it will be a challenge.

However, while these are consequential worries, they are not enough to lose sleep over. It would take a lot to derail the strengthening U.S. economy.

Click through for a complete economic outlook for 2015. Read Mark on Moody's Analytics Dismal Scientist.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.