- The U.S. economy is not only making good progress, but it's doing better than many expected in the wake of collapsing house prices at the end of the last decade. Growth likely will quicken in 2015.
- Other advanced economies are struggling a bit more than the U.S. Most aren’t growing fast enough to absorb the slack left by their economic crises. They will gradually speed up, though, because their central banks now are taking actions to arrest disinflation pressures.
- For the balance of this decade to return to full employment, most advanced economies, including the U.S., will need to grow faster than their potential.
- Inflation is likely to remain benign. The Federal Reserve may start to push its short-term interest rate up toward a more normal 3 to 4 percent level sometime between summer 2015 and summer 2016.
- U.S. bond yields will go up when that happens, but the rise will be orderly because forward rates already assume the Fed will tighten, and other key central banks will be slower to move.
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