Economists Predict Good Cheer For The New Year
As the new year begins, most economists’ annual forecasts are brimming with good cheer.
Just one example: Goldman Sachs’ forecasters wrote, “The economic news remains broadly encouraging.”
And stock analysts are upbeat about the outlook for Wall Street.
At JPMorgan, they said the country is in the midst of “a classic bull market” that is not done running yet.
NPR’s Marily Geewax joins Here & Now’s Meghna Chakrabarti to discuss the data behind the optimism.
MEGHNA CHAKRABARTI, HOST:
From NPR and WBUR Boston, this is HERE AND NOW. I'm Meghna Chakrabarti.
And Happy New Year to you. Hope it's a great one. Many economists are already feeling the cheer. One example, forecasters at Goldman Sachs wrote, quote: The economic news remains broadly encouraging. And stock analysts are upbeat about the outlook for Wall Street, which ended 2013 with its best year since 1995. Well, joining us now with more is Marilyn Geewax, senior business editor for NPR. Marilyn, welcome and a Happy New Year to you.
MARILYN GEEWAX, BYLINE: Hi. Happy New Year to you too.
CHAKRABARTI: So let's kick off 2014 with some good news. Why are economists feeling upbeat?
GEEWAX: Well, they really are. It's a pretty cheery outlook for the new year. And they've got a lot of good reasons for it. You know, I've gone through all of these forecast reports that economists have put out, and one thing a lot of them come back to is that Congress might be less of a nuisance.
GEEWAX: They all point out that there's more certainty now. And then another thing that's been happening domestically is the energy industry just keeps forging ahead and that's helping attract manufacturers from around the world to set up shop in the United States. So we're seeing good job growth there. So there are some strong economic factors in the United States. And all of that is making consumers more confident, so they're opening up their wallets.
CHAKRABARTI: OK. So if that indeed is happening, is that translating into more spending, which is then going back into the economy or should go back?
GEEWAX: Yes, exactly. You know, when people are feeling more confident and jobs are looking up a little bit and your energy prices are being held down to a reasonable level, then you can spend more, and we're seeing that. The auto sales have been terrific, yeah, in 2013. And going forward into 2014, analysts think it's going to be another good year. Home sales have been pretty strong. There are some concerns about if the interest rates go up, will that tamp down home sales? But right now the view is that there is a pent up demand. People want cars. They want homes. And they are in a position to go ahead and do that and complete those purchases.
CHAKRABARTI: So overall, Marilyn, what does this mean for the economy as a whole, for the nation's GDP? Are there projections of what that might be over the course of 2014?
GEEWAX: Yes. Everybody was holding back a little bit, thinking it would be maybe like 2.5 percent. But recently those estimates have been going up for the new year. And it's more like 3, maybe even more than 3 percent. Now, if you're one of those millions of people who's still don't have job - and there's lots of folks out there with no jobs - it still feels awfully tough. But you know, the progress is coming. It's not a huge bounce back. You'd like to see 4, 5, 6 percent to really mop up all those unemployed workers. But at least, if we can get to a steady 3 percent or above, 2014 really should be a pretty positive year.
CHAKRABARTI: Well, Marilyn, I have to say, I'm really glad that you mentioned people who are still looking for jobs or long-term unemployed. And I would also add to that those folks who still also feel like they're living from paycheck to paycheck.
Because even though the cheery news is quite uplifting, there's always that specter of say, for example, inflation and that paycheck is not going far enough. What about that?
GEEWAX: Well, the inflation outlook is quite low for 2014. The Federal Reserve is estimating about - maybe 1.5 percent, so that's a - it's a really historically low level of inflation. But remember, there are still huge headwinds for this economy. Around the world things aren't growing quite as fast as one might hope. You know, Europe still has lots of problems. China has slowed down some. So, you know, it's not a perfect picture by any means. And we've got that overhang of at least 4 million people who are long-term unemployed in this country. But compared with other recent years, this feels pretty good, heading into the new year.
CHAKRABARTI: Yeah. And what is what New Year's day for if not for feeling at least a little hopeful.
GEEWAX: A little bit hopeful.
CHAKRABARTI: Marilyn Geewax is NPR's senior business editor. Thanks so much, Marilyn.
GEEWAX: Oh, you're welcome. And Happy New Year.
CHAKRABARTI: Are you feeling the economic good cheer too? Let us know at hereandnow.org. Transcript provided by NPR, Copyright NPR.