Economists project slow but steady growth as we head into 2014, and although better times have been promised for awhile now, there is room for positive surprises in business and finance next year. Although GDP increased 4.1 percent in December, a survey published on Friday by CNN shows expectations are low for the modest recovery to change everyday life, as 70 percent of respondents said the economy is generally in poor shape. Stock-owning Americans stand to profit from surging equity prices, while long-term unemployment benefits are expiring from congressional inaction and wages remain stagnant for some workers. All that said, here are some bright spots we might encounter in the new year:
Stable Stock Values
The stock market hit record highs during 2013, but economists predict values for some stocks to drop amid a sell off sometime in mid-2014. The market is ripe for companies to go public, particularly Internet companies, which appear to be enjoying a bubble of prosperity. While speculation is not as outrageously high as before the dot-com stock bubble hit bottom in 2001, financial firms could make investments more stable by setting more modest valuations for stocks. This would decrease risk and allow more middle class Americans to safely enter the equity market and buy stocks as a rainy day fund.
Tech Jobs Boom
If tech stocks keep climbing hopefully those companies will hire new positions, investors will support entrepreneurs to create startups, and the resulting innovation will allow industries to expand and create new jobs. Demand is increasing for information technology jobs including analytics, software development and mobile application designers, so there's hope recent graduates and professionals seeking a career change can build those skills to benefit as middle management pivots to build the Internet economy. Job seekers could be trained for this shift via colleges and government programs like the U.S. Small Business Administration.
Economic recovery continued despite the 16-day government shutdown that placed funding and currency stability at risk, so imagine how things would improve if politicians were able to compromise and pass a few laws. Congress recently agreed on a budget deal to keep the government funded, but the House Republicans and Senate Democrats are expected to remain at loggerheads in 2014, a politically-sensitive election year. It is uncertain whether there is enough bipartisan energy to pass game-changing bills on issues including immigration policy, but Congress could re-authorize tax breaks for small businesses, maintain support programs including food stamps or extend unemployment insurance to help average Americans. The government shutdown damaged faith in the U.S. economy, so if Congress can't work together they could at least play nice to encourage consumer confidence.
Consumer Confidence Grows
People need faith in the economy to know it is safe to spend their hard-earned money on a new car or buy a house instead of renting one. During 2013 parts of the housing market improved to pre-recession levels and auto bailout ended as the government sold its stake in General Motors. Whatever economic indicators influence the prices of stocks or interest rates, people's willingness to buy things will be dominant factor for business growth in 2014. A December report from Thomson Reuters and the University of Michigan shows consumer sentiment rose to 82.5 from 75.1 in November.
Growth in Europe, China
Stronger U.S. economic growth could spur prosperity in other countries, and vice versa. If the European Union resolved difficulties with its Euro currency, Americans could enjoy benefits including new business deals and more stable stock and bond investments. China's economic growth of recent years is slowing amid a declining international demand for goods it produces, the South China Morning Post reported Thursday. An improving U.S. economy could allow that country to pay rising expenses to improve labor and environmental standards and offer better product deals for American consumers.