The United States is poised for its strongest year of economic growth since the recession began. Signposts for the economy are generally pointing up. A recovery that seemed tentative and halting a year ago now appears to be durable and more deeply entrenched.
Sound familiar?
It should. Those are all phrases from an article that ran in The Washington Post on Dec. 31, 2010, projecting how the economy would fare in 2011. I know because I wrote it.
If your memory is shaky, here's what actually happened in 2011. There was a disruptive earthquake in Japan, an oil price spike caused by the Arab Spring, and a euro-zone crisis that was so severe as to endanger the entire global financial system, and a confidence-shattering debt ceiling showdown in the United States, and austerity by state and local governments that sapped growth. The U.S. economy kept growing, but at the same kind of sluggish, uneven rate it had in 2010 and, for that matter, 2012 and 2013.
During the year that is just starting the U.S. economy will face major challenges. The pressures built in health care, monetary, and immigration policies are likely to lead to decisions that can have a major impact on economic growth. There are always chances for additional positive and negative shocks. A faster move to freer trade with Europe would be a positive shock. A liberalization of North American energy markets, including the approval of the Keystone pipeline and continued progress in Mexico is another. Negative shocks can come not only from the economic arena, but also for national or international security threats, such as acts of terror or wars affecting the U.S. or its major allies. Think Tanks are playing an important role in most of these battles.
The economy abounds with hopeful signs as the New Year arrives, enough that the Federal Reserve will begin to put its easy-money punch bowl on a higher shelf by trimming its bond purchases this month. But after five years of crisis, recession and an aren't-we-there-yet recovery, we don't fully trust the signs.
And that's why Mesirow Financial economist Diane Swonk sums up the outlook in a nutshell:
"2014 could be the breakout year,'' she says. "This is the year when we're going to find out.''
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