What to Expect in 2014
Each year in this column I reflect on the year behind us and look ahead at the year to come as I lay out my expectations for the next 12 months. In the last two years, I’ve started this column with virtually the same sentence: “In many ways a look ahead will be a look back.” While that will apply to some aspects of 2014, we will see some important shifts as momentum continues to build during the year.
I use the term “momentum” cautiously. We won’t return to economic growth in 2014. The ripple effects of the “little depression” of 2007-2008 continue to slow economic growth in 2014. But growth does pick-up slowly. In 2013 we saw the economy grow at 1.7 percent. This is about three-tenths of a percentage point lower than the consensus economic forecast at the start of the year. Today, we believe economic growth in the U.S. will increase to 2.5 percent in 2014 – a measurable uptick from 2013.
Economic Bright Spots and Risks
There are a number of bright spots as we look into 2014. Diminished fiscal drag and improving private sector demand help lift growth for the year. Vehicle sales continue to outpace expectations and the housing market continues to improve in terms of housing starts and pricing. The labor market will improve slightly as increased hiring will place some downward pressure on the unemployment rate.