The American economy has been showing positive and steady signs of recovery throughout the first part of 2013. Economists are now predicting 2014 will be the year that the economy finally shakes off the last effects of the Great Recession.
The positive forecasts come from a variety of signs, perhaps most significantly represented by economic forecasts released recently by the U.S. Federal Reserve. The report suggests the United States unemployment rate may drop as low as 6.5 percent in 2014, lower than what the Federal Reserve had predicted with its March forecasts.
Currently, the unemployment rate is 7.6 percent, and new forecasts show it could drop below the 6 percent mark by 2015. In a press release, the Federal Reserve also said it plans to keep the federal funds rate at its current low rate, between 0 and .25 percent, as long as the unemployment rate remains above 6.5 percent.
The federal funds rate is the interest rate charged on overnight lending between depository institutions, according to Investopedia. Though the actual rates are set by the open market, the Federal Reserve sets a target range. The target range was set at its low current level in December 2008 in an effort to help spur the ailing economy.
Additionally, the new forecasts predict a faster growing gross domestic product (GDP) in 2014 at 3.0 to 3.5 percent. This is also slightly better than the March forecasts, and better than this year’s predictions, which range from 2.3 to 2.6 percent, as well.
However, in a CNN report indicating a positive outlook of the American economy, Steve Blitz, chief economist at ITG Investment Research, predicts GDP growth could reach the 3.5 to 4 ercent range.
Blitz also predicts the economy will be helped as millennials — those born between the early 1980s and the early 2000s — enter into the home- and car-buying stage of life. Another factor will be home prices, which are already on the upswing, and are predicted to continue to rise into next year.
A recent report from CoreLogic states that year-over-year home prices in April were up 12.1 percent, the highest point since February 2006 — well before the recession began. Additionally, a survey of 50,000 Realtors in the National Association of Realtors Confidence Index found 86 percent of them had constant or increasing prices in their local market. Most have a positive outlook on the future of the market, as well.
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