Bureau of Business Research
Date of this Version
1-2014
Citation
Business in Nebraska vol. 68, no. 708
Abstract
THE NEW NORMAL
U.S. Macroeconomic Outlook
U.S. economic growth accelerated in late 2013 as economic uncertainty decreased and the temporary costs of austerity – tax increases and Sequester spending cuts – began to wane. That growth was driven by a continued improvement in the housing sector and improving conditions for exporters as economic growth returned to Europe. These two factors are expected to also support economic growth in 2014. Rising real incomes also will encourage solid growth in consumption. As a result, growth will continue from 2014 through 2016. Growth will strongest in 2014 and moderate in 2015 and 2016 as the housing sector completes its recovery.
Throughout the forecast period, growth will be limited by tightening monetary policy. Tightening will begin with reduced bond purchases by the Federal Reserve Bank. This process has already begun and will continue throughout 2014. After bond purchases end, the Federal Reserve will begin raising short-term interest rates. Effectively, monetary austerity will replace fiscal austerity. Like fiscal austerity, monetary austerity is a necessary step and a sign of progress in the economic recovery. But, monetary austerity will limit growth over the next few years. Demographic change also will limit economic growth. An aging population in the United States is one contributor to falling labor force participation rates. The U.S. economy also may face pressure from competitive currency devaluations in Japan and other trading partners.
Employment
Construction and Mining
Manufacturing
Transportation and Utilities
Wholesale Trade
Retail Trade
Information
Financial Services
Services
Government
Personal Income
Nonfarm Personal Income
Farm Income
Net Taxable Retail Sales
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Copyright 2014 by Bureau of Business Research, University of Nebraska.