Global economy also expected to perform better this year
OTTAWA, Jan. 30, 2014 /CNW/ - The U.S. economy is finally expected to
break out of the sluggish growth that has plagued it since the end of
the recession, according to The Conference Board of Canada's U.S. Outlook: Winter 2014.
Following growth of 1.8 per cent in 2013, real gross domestic product
(GDP) in the United States is expected to expand by 3.1 per cent in
"Last year, the U.S. economy was dragged down by restrictive fiscal
policy," said Kip Beckman, Principal Economist. "The outlook for the U.S. economy is brighter in
2014, thanks to improving labour markets and the ongoing recovery in
the housing sector. In addition, the new budget deal recently reached
by Congress will avoid another federal government shutdown and help the
• Growth in the U.S. and world economies will be in the three per cent
range in 2014.
• The U.S. unemployment rate is on track to decline to 6.5 per cent by
• Job gains in the U.S. have been spread across most sectors of the
economy and wages have been increasing in many industries.
A combination of tax increases and spending cuts at the beginning of
2013 chopped about 1.5 percentage points from the U.S. economy last
year. In 2014, the public sector will only take roughly 0.4 percentage
points out of the economy, thanks to a less restrictive fiscal policy.
U.S. labour markets and housing sector are both on the mend. While U.S.
job creation stalled at the end of last year, it should rebound over
the near term and we expect monthly job gains of more than 200,000 per
month. Job growth in the U.S. is forecast to increase by 1.8 per cent
this year and the unemployment rate should continue to drop.
Likewise, housing starts in the U.S. surged toward the end of last year.
Housing starts are expected to continue to increase at a strong pace
over the next two years due to pent-up housing demand and rising home
prices. At the same time, household spending is expected to grow by
close to three per cent in 2014.
A key risk for the U.S. economy going forward is the winding down of the
Federal Reserve's bond buying program. If the tapering program does not
go as anticipated, it could sharply increase interest rates on
mortgages and other loans and hurt consumer spending and business
The improved outlook for the U.S. economy, coupled with the end of the
recession in the eurozone, will boost global activity in 2014. Europe's
rebound will continue to be restrained by sovereign debt problems, high
unemployment and tight credit conditions. Nevertheless, real GDP growth
of around one per cent is expected in the eurozone in 2014. The world economy is forecast to grow by three per cent this year, following a gain of
just 2.4 per cent in 2013.
SOURCE: Conference Board of Canada
For further information:
Yvonne Squires, Media Relations, Tel.: 613- 526-3090 ext. 221