Care to guess how the U.S. economy will perform next year?
Join the club.
Fargo calls for sustained subpar growth and low inflation, with continued
caution by businesses and consumers. Interest rates will remain low and the U.S. housing market will continue its recovery, transitioning
away from investment and speculation to traditional fundamental drivers.
But wait: Kiplinger
is looking for increased business and consumer confidence as a driver of
economic growth, while admitting that growth will continue to be below the
long-run potential, even five years into the recovery. The publication also
sees Congress as a potential fly in the ointment with numerous opportunities
for gridlock and conflict. There is agreement about sustained low short-term
interest rates, with more volatility in longer-term rates, which are expected
to rise modestly.
If you’re looking for rose-colored glasses, they’re at Bank
of America. While acknowledging a volatile environment, BofA/Merrill Lynch is
U.S.-led economic growth on the global stage, with a huge amount of
"inherent upside risk” in a vigorous bull market for the U.S. dollar and
interest rates that will slowly rise during the year.
There’s also a wide range of opinions about the outlook for U.S.
stock prices in 2014. Bears include Nobel laureate Robert Shiller, and he’s not
alone. Schiller is worried that stocks are headed toward bubble territory,
driven higher by Fed stimulus and by speculators, and that the time to buy was
yesterday. Shiller won his Nobel this year in forecasting asset prices, so that
might add a bit more weight to his forecast of a bursting bubble.
Henry Smith, chief investment officer at Haverford Trust,
begs to differ and continues to ride the bull. Kiplinger
quotes Smith: "We don't see a bear market coming. We believe that
March 2009 represented a generational low, and that this is the middle of a
sustained bull market."
The forecasts are dizzying and often divergent, but common threads seem to run
through all of them: Interest rates are likely to remain low, hiring is likely
to remain tepid, GDP growth will be underwhelming, and getting agreement on the
stock market is like trying to herd cats. There is also likely to be a great
deal of variation depending on region.
Looking for a bottom line? Be careful whose crystal ball you
use, trust your eyes and ears with anecdotal evidence in your region, and be
ready to duck and cover – just in case.