There's one thing about the economy -- it hardly ever ends up behaving exactly like people expect. It's not a coincidence that people sometimes draw comparisons between economists and weather forecasters. Even the best of them are only right part of the time.
With the end of the year now in the offing, and most of 2013 now in the rear-view mirror, the economy has been performing better than expected lately.
Let's check off some things the U.S. economy has overcome.
- Everything having to do with the federal government: sequestration, the partial shutdown and Obamacare.
- The fragility of the global economy: Europe is still struggling.
- Echoes of the worst economic crisis since the Depression.
A number of economic reports recently have been surprisingly strong. They include October readings covering hiring and retail sales.
Jeffrey Rosen, chief economist at Briefing.com, says, "We feel pretty confident that the government shutdown, which was expected to reduce growth by 0.25 (percentage points) to 0.5 percentage points, did not adversely affect fourth quarter GDP at all."
Lest we forget, the stock market has continued to notch record highs. The Dow Industrial average notched its first-ever close above 16,000 this week, with year-to-date gains of more than 20 percent. The market is on track for its best percentage gain in a decade.
The next chapter in this story promises to be interesting. The Federal Reserve has indicated that it could begin downshifting on economic policy "in the coming months." That translates to pulling back on asset purchases, which have recently been going at a clip of $85 billion a month. How the markets and economy digest the potentially dicey transition will be every bit as unprecedented as the policies themselves.
Says Rosen, "Still, we are not talking about a boom in economic activities." He expects growth to remain below 2 percent here in the final quarter of the year. With unemployment unlikely to fall much further and inflation running well below the Fed's target, Rosen says the Fed's shift in gears won't happen right away. It looks increasingly likely that the driver at the wheel of the Fed, when there's a shift, will be Janet Yellen.
How do you think the U.S. economy has been faring as of late?
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