The economy is shedding the drama of past years and is poised for growth in 2014, predicts Ohio economist Ken Mayland.
“2013 was a year with lots of drama, but not a whole lot movement (forward),” Mayland said during a talk Thursday at Kalahari Resort. His presentation, “As The World Turns, in 2014,” was part of the ninth annual Economic Forecast sponsored by the Erie County Chamber of Commerce.
Mayland forecasts the U.S. economy could grow up to 3 percent this year, compared to the sluggish 1.9 percent rate last year. That was also down from the 2.8 percent growth in 2012.
Last year’s drama included a litany of events — the fiscal cliff, the uncertainty over the Bush tax cuts, the government shutdown, and the European economy pulling back from a feared implosion, Mayland said.
The dominant theme for 2013 was the Universal Health Care plan, or Obamacare, which Mayland contends acted as a wet blanket of uncertainty, keeping businesses from hiring or spending any money on capital projects.
It’s still playing out in 2014, with the Congressional Budget Office on Tuesday releasing a report on the possible impact on Obamacare. The budget office, which produces independent analyses of budget and economic issues, states the plan amounted to a tax on work.
According to the budget office, Obamacare could reduce employment by an estimated 2.5 million jobs over 10 years, Mayland said.
But even with that, 2014 should be a better year.
•Less fiscal drag on the economy: “If the economy grew to 1.9 percent in 2013 with these new big tax increases, it should grow even faster in 2014 with much smaller tax increases” Mayland said.
•Less uncertainty: Tax laws are more detailed, the government is less likely to see a shutdown and there’s less likelihood of a financial crisis in the U.S and worldwide, Mayland said.
•Industry performance: All signs indicate the housing and auto industries will perform well this year, as should the aerospace and energy industries. “Boeing has enough orders to produce great quantities past this decade,” Mayland said.
•Inventory increase: Businesses are flip-flopping from decreased inventory to increasing inventory holdings. “When inventory flips, we see that as rebuilding and as a boost to the economy” Mayland said.