The forecasts for 2014 are starting to roll in and, for the most part, they herald the arrival of better economic times – times, though, that are still modest and somewhat sluggish in light of the hopeful expectations of many, especially truckers.
“We expect that in 2014, world [economic] growth will accelerate gradually,” noted Nariman Behravesh, chief economist for global consulting firm IHS. “We do expect U.S. growth to slowly speed up … [with] underlying growth, which is between 2.5% and 3%, starting to show up.”
He added that the growing strength of the U.S. housing market coupled with more capital expenditures on the part of businesses and a “solid foundation” of consumer spending should help a lot of things “go right” for the U.S. in 2014.
[You can view Behravesh’s complete 2014 global economic forecast below.]
Doug Duncan, chief economist for Fannie Mae, also thinks good trend lines are forming for the U.S. economy, in particular as uncertainty surrounding fiscal and monetary policy wanes while consumer spending and manufacturing activity improve.
He projects real economic growth for the U.S. to come in at approximately 2.2% for all of 2013 and then increase to 2.7% next year.
"Looking ahead into 2014, we believe the fiscal and monetary policy debate will continue to influence consumer and business attitudes, although we expect to see a meaningful pickup in growth next year as some of those lingering policy issues now are beginning to clear," Duncan explained.
"Consumer spending, which is a key driver of economic growth, should climb somewhat as the impact of recent fiscal tightening fades and as labor market conditions continue to improve,” he added.
“Furthermore, consumer attitudes already appear to have recovered from the temporary government shutdown in the fall. Strong October consumer spending growth and a jump in November auto sales should help build momentum for further spending growth in the fourth quarter,” Duncan said. “In addition, the November jobs report showed solid gains in hours worked and in earnings, pointing to stronger growth in wage-and-salary income and providing support for consumer spending."
Yet with regard to housing, he expects that the improving employment picture developing now and into 2014 will be accompanied by a sustained increase in interest rates, which in turn will roll over into the mortgage market.
"While that will likely drag on housing growth expectations, we believe the housing recovery will continue on a modest upward trend toward more normal levels,” Duncan pointed out. “Our forecast calls for additional home price increases next year, although declining investor demand and other factors are expected to slow the pace of appreciation. Overall, 2013 housing indicators have shown about the performance we expected and we believe that their gradual march toward normal will continue into 2014."
Kathleen Brooks, research director FOREX.com – the retail division of Gain Capital Holdings, Inc. – also thinks a positive economic swing is developing.
"We believe 2014 is set to be the year when the recovery will cement itself,” she said. “With an improved economic backdrop we expect central banks to take the first steps towards normalizing monetary policy."
As 2014 develops, FOREX expects a medium-term U.S. dollar recovery, especially against the Japanese yen, while fears about a Eurozone break up may recede further into the distance helping to boost the Euro currency, particularly in the first quarter of 2014.
“[But] expect volatility in global stock markets as central banks take steps to wind back their enormous stimulus programs,” Brooks cautioned. “Too fast and stocks could fall sharply; but a steady, cautious taper, could help markets extend into fresh record-breaking territory.”
In the short term, though, trucking may face some more than a few bumps in the economic road as the industry deals with the fallout from a mixed holiday retail season, a spate of harsh winter weather, and the ongoing struggle to adhere to changes made to hours of service (HOS) rules back in July.
Trucking conglomerate Swift Transportation Co., for one, noted recently that its reducing its fourth quarter earnings projections as a result of some those issues, pulling down its profit estimates to a range of 33 cents to 36 cents a share from previous expectations of 40 cents per share.
Swift noted that unfavorable accident claims of approximately $12 million, costs associated with the wining of several sizable new dedicated contracts, severe winter weather, and the negative impact from HOS changes on overall miles, capacity utilization, and engine idle time, all combined to wallop its bottom line in the fourth quarter this year.
Still, despite all of those issues, Swift remained profitable – and if the positive economic trends being forecasted above develop in the New Year, freight haulers as a whole should see good tidings aplenty in 2014.
That’s the hope, at least.