Goldman Sachs economist Jan Hatzius is out with his top 10 questions for 2014 and his answers to them.
Below we quickly summarize them, and provide the answers.
Here we go.
1. Will the economy accelerate to above-trend growth? Yes, because the private sector is picking up, and there’s going to be very little fiscal drag.
2. Will consumer spending improve? Yes, because real incomes will grow, and the savings rate has room to decline.
3. Will capital expenditures rebound? Yes, because nonresidential fixed investment will catch up to consumer demand.
4. Will housing continue to recover? Yes, the housing market is showing renewed momentum.
5. Will labour force participation rate stabilise? Yes, but at a lower level that previously assumed.
6. Will profit margins contract? No, there’s still plenty of slack in the labour market for this to be an issue.
7. Will core inflation stay below the 2% target? Yes.
8. Will QE3 end in 2014? Yes.
9. Will the market point to the first rate hike in 2016? Yes.
10. Will the secular stagnation theme gain more adherents? No. With the deleveraging cycle over, people will believe less in the idea that we’re permanently doomed.
So basically, every answer has a bullish tilt. The economy will be above trend, margins will stay high, the Fed will stay accommodative, and inflation will remain super-low. Wow.
Business Insider Emails & Alerts
Site highlights each day to your inbox.