Top Five Economic Trends to Watch for in 2014
- Economic growth. The U.S. economy will continue to speed up from its humble two percent pace since the recovery began, and we’ll see the economic drag continue to fade. The stimulus from the Fed’s policy stance and booming stock market will be a big plus for 2014, but the broad stock market will slow down, rising roughly five percent. Overall, many signs indicate it will be a year of continued recovery for the economy, making it a great year for businesses to consider ramping up production, hiring and/or expansion efforts.
- More jobs. The growth of the labor force will pick up as more job opportunities open up and the economy continues to stabilize and improve. As a result, the decline in the unemployment rate will slow, meaning this could be a critical year for companies to focus on job retention and mobility incentives in order to recruit and retain skilled talent in their industry.
- Low inflation and interest rates. Inflation will remain near one percent, about half of the Fed’s long-run goal, with commodity prices easing back to the familiar zone established over the last several decades. The federal funds rate will remain at 0 to ¼ percent, restraining long-term interest rates from fully normalizing. Companies and organizations looking to expand their business or facilities or to consolidate their debt may consider taking advantage of these conditions in the next year, before rates start to climb as they inevitably will in coming years.
- Improved real estate market. The real estate sector will be back in the saddle, carrying its own weight. We’ll have to watch to see how this impacts valuation of current real estate prices—which will determine how many existing properties we’ll see on the market overall—and monitor what impact higher employment and low interest rates has on appetite for new and existing properties.
- Global stability. The European debt crisis, which has been a headwind for the global economy, will fade for now. Emerging economies will benefit significantly because they depend on exports to Europe and other developed economies to support their development. With conditions stabilizing, U.S. businesses with assets abroad should feel more at ease this coming year.
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