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The U.S. economy in 2014, improvement but not full employment

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What will the year 2014 bring to us in the continuing struggle to get the U.S. economy back to robust full employment? From some recent media reports we could conclude that we will make progress, but we won't be back to full employment by the end of 2014.

Here are stories to ponder in the order that they appeared in various media outlets in the last month of 2013.

Monday, December 30: Economic columnist Robert J. Samuelson, The Washington Post, answers his own question, "Could 2014 be the year when the recovery actually feels like a recovery?"

His answer is a tentative, "Well it could."

He writes the job market has recently strengthened, household debt is down, the housing recovery is still on track and corporations have lots of cash on hand.

Christmas Day, NPR interview with Nariman Behravesh, chief economist of IHS Global Insight.

In response to questions from David Inskeep of NPR, Behravesh says

"So that's really what we're referring to here, is that as we go through 2014, the revisions to numbers that are released will probably continue to go up. And we will be surprised even when new numbers come out as to how strong they are."

In response to a follow up question about whether we will be looking at a stronger economy, Behravesh answers, " I think the answer is, yes, there will be more hope, there will be more optimism about the economy. And in particular, consumers and businesses I think will be more willing to spend, which will again help to create more jobs and a better mood in terms of the economy."

December 26, The Christian Science Monitor lists five economic predictions for the economy in 2014, among them higher growth than was experienced in 2013. Citing expectations among economists, CSM reports that growth in Gross Domestic Product will be "roughly" a percentage point higher than the rate of around 1.9 percent for 2013. If so, that would bring economic growth for 2014 to close to three percent, not spectacular for a less than full employment economy, but still very good.

December 23, Voice of America in a piece entitled, Global Economic Outlook Is Stronger in 2014, says, "As the year ends, more people are finding work in the United States, the economy is growing at the fastest pace in two years and Congress has a new budget that effectively removes the threat of another costly government shutdown."

VOA adds, “Could be a better year than 2013, particularly if we don’t see the type of shenanigans we saw with the shutdown.”

December 22, International Monetary Fund Managing Director Christine Lagarde says on NBC's Meet the Press, that the IMF is raising its economic outlook for U.S. Lagarde says, “We see a lot more certainty for 2014."

Lagarde cited reasons for the improved outlook, "There has been good action taken by Congress to eliminate the fear about the budget and to reduce the sequestration. We see the Fed having taken some very well-communicated action concerning the tapering of the [bond buying] program, and those are good signs -- in addition to which we see some good numbers: Growth is picking up and unemployment is going down."

December 16, Los Angeles Times, "After six years of a gloomy recession and shaky recovery, the U.S. economy looks poised to regain its glow next year with stronger job growth, bigger income gains for more people and a resurgence of homeowners moving up into new digs."

The Times article says unemployment will continue to decline, quoting Robert Kleinhenz, chief economist for the Los Angeles County Economic Development Corp, "We could see the unemployment rate down to 6% this time next year." That would be a full percentage point below the U.S. rate of unemployment in November 2013.

What does this add up to? Well, 2014 could be a better year than 2013. We can hope so, but, at most, it still looks like we may end 2014 with the unemployment rate at 6% or more, and high levels of economic inequality and stagnating wage rates as reported in an early 2013 Sunday Review of The New York Times.

But a U.S. unemployment rate of 6 % by the end of 2014 would be progress. Still, a lot of individuals and families will remain in distress.

We need an economy where unemployment is well below 6 % and real wages are rising steadily. If all goes well, maybe we will get there in 2015.



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