The New Year brings slightly improved growth prospects for the world economy. While most Americans are solely focused on prospects here at home, there's a better story to be told about what's happening beyond our borders.
Business research group The Conference Board put China at the top of its growth list for 2014 with an annual gross domestic product, or GDP, of 7 percent. India, Sub-Saharan Africa and other parts of "developing Asia" are all put at 4 percent GDP or more.
IHS chief economist Nariman Behravesh looks for 3.3 percent global growth in 2014, up from 2.5 percent in 2013. As for how things might actually turn out, "There will be more upside risks than downside risks facing the global economy," says Behravesh. Unfortunately, he says unemployment will fall only slightly in the developed world, citing "technology-driven productivity improvements in the manufacturing and services sectors." On the upside, better growth abroad also means more demand for goods made by U.S. manufacturers. U.S. growth is expected to top 2 percent in 2014.
Runaway inflation has not been seen with improving prospects. Economist Bob Brusca wrote in a note this week: "Inflation seems destined to remain low. That could keep interest rates quite low for some time to come, for better or for worse." That means savers may continue to lament continued low rates of return.
Reflecting renewed confidence here at home, the Federal Reserve has begun to take away some of the medicine it had prescribed for the U.S. economy. It is scaling back monthly asset purchases in January by $10 billion, to $75 billion, with further pullbacks expected in the coming year.
Are you feeling better about the outlook? Have your own finances improved as much as hoped over the past year?
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