Tags: Samuelson | recovery | households | economy

WaPo's Samuelson: 2014 May Be the Year of Real Recovery

By    |   Tuesday, 31 December 2013 06:56 AM

Count Washington Post columnist Robert Samuelson among those who predict the U.S. economic recovery may finally take off next year.

Writing in his column, Samuelson points out that several economic fundamentals — including the job market, household debt, the housing market and corporate wealth — are improving simultaneously.

Nonfarm payrolls increased an average of 204,000 from August to November, compared with an average monthly increase of 180,000 for the first seven months of the year. "Given how reluctant companies have been to hire, the gains suggest rising confidence," he states.

Editor’s Note:
Retired Americans Slammed by Obama’s Redistribution Plans

Households focused on reducing debts in the aftermath of the housing market collapse and stock market crash, and the reduced spending smothered the economy.

But consumers appear to have made good headway in reducing debts, thanks to low interest rates and rebounding stock and home prices.

A limited supply of homes for sale continues to support home prices. The underlying demand for new homes is about 1.5 million units a year, he notes, quoting Jason Furman, chairman of the president's Council of Economic Advisors. Housing starts in 2013 were about 900,000.

In addition, corporations have loads of cash that enables them to invest in buildings and equipment. Corporate cash and short-term securities have doubled from $600 billion to $1.2 trillion since 2007, according to Standard & Poor's data cited by Samuelson.

So far, corporations have felt that weak sales have justified investing their cash, but that view may be changing, he predicts. For instance, General Motors plans to invest $1.3 billion in five U.S. plants, and Boeing wants a new factory for its redesigned 777 jetliner.

Joseph Carson, an economist at AllianceBernstein, predicts that business capital spending will increase 9.6 percent for buildings and 8.1 percent for machinery and software, Samuelson states. This year they're expected to increase 1.7 and 2.7 percent, respectively.

Still, there are reasons to be cautious, he says. "The Great Recession changed attitudes and behavior because it was both unexpected and devastating. . . . Americans have been sobered. The resulting wariness may be self-fulfilling."

Others also see good odds for an accelerating recovery.

"There is confidence that there is strength in underlying demand," Ira Kalish, chief global economist for Deloitte Touche Tohmatsu, tells CNBC

"If we see more investment and more hiring by small businesses it could have a very positive impact — because small businesses historically account for the lion's share of job growth. And that's where we haven't seen strong job growth."

Editor’s Note: Retired Americans Slammed by Obama’s Redistribution Plans

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Count Washington Post columnist Robert Samuelson among those who predict the U.S. economic recovery may finally take off next year.
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2013-56-31
Tuesday, 31 December 2013 06:56 AM
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