The National Association of Business Economists annually surveys members on their outlook for the next year. Their 2014 economic outlook has just been released, and here are some of the more salient points:
1. GDP growth will accelerate, with a full year growth of 2.8%. This is lower than Q3 of this year but indicates their belief in slow growth . . . but still growth -- no recession.
2. Job creation will continue at 200 thousand per month, with a full-year average unemployment rate of 7%, which is exactly where it is now. No good news for the desperate.
3. The S&P 500 will end 2014 at 1,850. (It is already over 1,800 now.) If there is a bear market, they expect it to be short-lived.
4. Export growth will double from 2.5% this year to 5% next year.
5. There is only a 20% probability of another government shutdown. (Of course, announcement of the latest budget deal suggests it is probably even lower.)
6. Tapering of quantitative easing will definitely begin in the first half of next year -- duh! Since the ridiculous "taper tantrum" of the stock market last summer, it does appear that the market is finally starting to realize that tapering is a good thing. But, we'll have to wait before seeing if the good economic news becomes good financial news again.
7. Short-term interest rates will remain low, but the longer term rates (10-year Treasuries) will rise somewhat from 2.8% to 3.25% next year.
8. Inflation was only 1.5% this year and is expected to rise modestly to 1.8% next year -- hardily worrisome!
While I haven't gone back to last year's forecast, I'll bet it was almost identical to this one. The irony is that, while it was somewhat pessimistic last year, it was still basically correct . . . slow, steady growth. I expect it will also be right this time . . . slow, steady growth.
I sure miss the good, old days when 4.0% GDP growth was routine!
1. GDP growth will accelerate, with a full year growth of 2.8%. This is lower than Q3 of this year but indicates their belief in slow growth . . . but still growth -- no recession.
2. Job creation will continue at 200 thousand per month, with a full-year average unemployment rate of 7%, which is exactly where it is now. No good news for the desperate.
3. The S&P 500 will end 2014 at 1,850. (It is already over 1,800 now.) If there is a bear market, they expect it to be short-lived.
4. Export growth will double from 2.5% this year to 5% next year.
5. There is only a 20% probability of another government shutdown. (Of course, announcement of the latest budget deal suggests it is probably even lower.)
6. Tapering of quantitative easing will definitely begin in the first half of next year -- duh! Since the ridiculous "taper tantrum" of the stock market last summer, it does appear that the market is finally starting to realize that tapering is a good thing. But, we'll have to wait before seeing if the good economic news becomes good financial news again.
7. Short-term interest rates will remain low, but the longer term rates (10-year Treasuries) will rise somewhat from 2.8% to 3.25% next year.
8. Inflation was only 1.5% this year and is expected to rise modestly to 1.8% next year -- hardily worrisome!
While I haven't gone back to last year's forecast, I'll bet it was almost identical to this one. The irony is that, while it was somewhat pessimistic last year, it was still basically correct . . . slow, steady growth. I expect it will also be right this time . . . slow, steady growth.
I sure miss the good, old days when 4.0% GDP growth was routine!
