Just curious as to what everyone thinks we have in store for 2015? Depression, Recession, flat or hold on times is gettin good. Our business (marine dealership) had a fairly robust year this year. That being said I have a feeling of angst, reservation for the upcoming year. If you read any financial opinion these days either the sky is about to fall or it has no end. What say ye oh wise ones?
you did say Slowtwitch style, so…
Continued bifurcated economy. Most urban areas good growth. Rural areas static.
Depends a lot on what SCOTUS does with ObamaCare. As of right now, the employer mandate is scheduled to go into effect in 2015. I have been saying for the last 2 years that the kick in the nuts provision(s) of the ACA have not even kicked in yet. Unless the employer mandate is delayed again, they will soon.
US Economy will grow at a healthy pace driven by cheap energy (oil). Manufacturing will start to rebound.
China will continue on its glide path toward slowdown, but still putting up impressive numbers. On a global scale, The Chinese slowdown and US growth will be a wash.
The BRICS will loose their luster. Particularly Russia and Brazil, both of which are too corrupt and oil export dependent.
The PIGS will continue to drag the rest of EU in the mud they wallow in.
Canada will slow out west (falling oil) and improve dramatically in Ontario as the CDN dollar falls and allows manufacturing to start being the driving engine of growth.
South East Asia will bloom - Vietnam, Indonesia, Thailand, Malaysia, etc. will all pick up where China is dropping off.
I think we’ll continue to see slow, but steady, growth. One potential positive would be corporate tax reform. The devil may be in the details, but with the new Congress, it may get done. One definite drag: volatility caused by the projected mid-year interest rate rise by the Fed. Will they or won’t they? No one really knows.
US Economy will grow at a healthy pace driven by cheap energy (oil). Manufacturing will start to rebound.
China will continue on its glide path toward slowdown, but still putting up impressive numbers. On a global scale, The Chinese slowdown and US growth will be a wash.
The BRICS will loose their luster. Particularly Russia and Brazil, both of which are too corrupt and oil export dependent.
The PIGS will continue to drag the rest of EU in the mud they wallow in.
Canada will slow out west (falling oil) and improve dramatically in Ontario as the CDN dollar falls and allows manufacturing to start being the driving engine of growth.
South East Asia will bloom - Vietnam, Indonesia, Thailand, Malaysia, etc. will all pick up where China is dropping off.
^This. Wildcard in my book is a strengthening dollar and its impact on economic growth. The United States continues to be the world’s bright spot.
Same as it’s been. Decent growth in GDP but flat wages.
GDP will grow 2.5%.
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Continued bifurcated economy. Most urban areas good growth. Rural areas static.
That seems to be the case in many areas. The stabilizing in home prices has varied greatly by area, and the stock market gain has primarily benefited people who live in urban areas. Any “trickle down” effect from this rise in capital investment tends to be localized.
Depends a lot on what SCOTUS does with ObamaCare. As of right now, the employer mandate is scheduled to go into effect in 2015. I have been saying for the last 2 years that the kick in the nuts provision(s) of the ACA have not even kicked in yet. Unless the employer mandate is delayed again, they will soon.
You think they will delay it again? I don’t think this will have much impact until 2016 when it goes from 70% to 95%. I do agree it will have a big impact on the economy though. The IRS will be hunting for fines to cover the overruns of ACA and since not everything is 100% clear, they will find them. Companies will be holding more reserves to offset any potential fines and start managing employees hours much more.
A friend/mentor and I were having this discussion last week, relative to our industries - photography and real estate. My friend is a former full time commercial photographer (I would not be shocked is his yearly billings are still a 1/3 of mine) who went into real estate 10 years ago and owns his brokerage firm, while I am a full time photographer shooting residential and commercial real estate who derives 80% of my income from the real estate market. We see the economy at a micro level and living in the Raleigh-Durham market skews our prospective to a certain degree - RTP (Research Triangle Park) has the highest concentration of college/post-college graduates, thus higher salaries. Residential real estate has been booming in the last 24-40 months, and may continue that way for the next 10, 20 or 50 years with RTP v.2, which is an 8,000 acre residential/commercial community that breaks ground next month. Because business has been so good, my friend has had to branch out to the coast or other counties and hire several agents to handle the commercial market, while I am finding some of my agents are selling a different quality house in areas that they never were in previously. But, and this is my friend’s concern, NC law makers may step in and get rid of the mortgage interest deduction plus add a real estate transfer fee of 6%. If this happens, the residential market will be in the tank.
Continued bifurcated economy. Most urban areas good growth. Rural areas static.
+1
I have been saying for the last 2 years that the kick in the nuts provision(s) of the ACA have not even kicked in yet.
I honestly don’t think we will see the real effect of the ACA for yet another couple years. Over the next two years, penalties kicking in and companies under 50 FTE’s dropping group coverage and handing the costs more and more over to the employee, you will see a larger and larger dependence on individual plans, either private or exchange. Problem will be when health care costs are not controlled and these same employees start to see a 5-10% increase year over year and some get jack slapped with huge increases due to a combination of things that used to get evened out by group coverage, age increases. Employers aren’t going to start giving larger raises to offset the cost and for the most part can’t afford to because now they are being nailed with that larger health care costs increase and the burden of accompanying taxation. Keep in mind what was once a business expense is now a “Wage” expense that will also have to be accompanied by FICA tax, workers comp costs, UE etc.
I tend to think it will not be pretty in the long run.
~Matt
Spent the weekend in Marin County, then came back to CenCal. Saw the bifurcated economy up close and personal.
Impossible to predict clearly as there are simply too many variables.
That being said, and since this is the LR, here is my take.
- Fed is and really wants to get out of the QE business. Doing so will be a hit to the stock market to some degree. That is a negative push on he economy.
- Employer mandate kicks in for the ACA as well as many under 50 FTE companies will be dissolving their groups. The result will be higher wages, but also higher taxes as employers attempt to offset the cost of insurance. The net effect, similarly priced policies plus additional wage taxes, will be a net negative on the economy. However this is assuming these people actually buy policies in the first place. End result is potentially short term net positive as people spend more money on more stuff…other then insurance. The real net effect of this will be 2-3 or more years out from now.
- While the US is ending QE Japan and some other countries are accelerating theres. Possible a net positive short term. Anther short term gain with potential catastrophic long term problems. FWIW Japan is already at 200+% GDP debt level.
- Chinese wages are continually growing. Good for China, bad for US prices. Net negative short term, possible net positive long term as jobs may shift back to the US. Then again maybe it will shift to lower wage areas in the world, Africa possibly.
From a less technically view and “Personal experience”, I think 2015 will be a small “Rest” or slight pull back year. I’m seeing way to much softness in a bunch of different areas that is unusual. The last half of 2014 has been “choppy” with ups and downs and all in all flat. Some times that means up follows and sometimes that means down follows. If I saw certain areas picking up I would tend to think up, but instead those areas are flat or down, machine sales, larger vendors like heat treaters, platers etc are all slow.
If I had to bet money I would say 2015 will be less then spectacular but not any type of recession or collapse. I’m actually far more concerned about 2017-2020 as the effects of lower and lower labor force, increased collection of unfunded liabilities by the boomers and latent effect of the ACA take place.
OTOH I’m actually looking forward to say 2025-2030. By that time China labor costs will have stabalized and they will be far less appealing cost wise. The ACA will have taken full course and either collapsed entirely or we will have had to deal with health care costs in some fashion as the economy will not be able to sustain 5-8% year over year increases. The government will have either collapsed or figured out a way to deal with all it’s unfunded liabilities and 18T dollar, probably 20-25T by that time, debt. OTOH the one sure fire way to “Figure out how to deal with” is to raise taxes, not sure that is sustainable either.
~Matt
My take on the effects of stopping QE…
1.) The marginal attractiveness of bonds as an investment will increase when QE ends as long term interest rates may rise slightly. Therefore, bonds will rise marginally vis-a-vis stocks and other assets as market participants realize the FED is no longer dedicating itself to killing the bond market. This means that the stock market will take a small, short term hit. It’s why the stock market is always taking this small, short term hit every time the FED announces tapering of QE. However, because the FED has been hinting at these changes for so long now, most of this is already priced into both stocks and bonds.
2.) Once long term interests rates rise a little bit, the profit margin on loans will increase, and banks will become more inclined to loan money. The increase in loans will increase money supply and increase the rate of economic activity. Economic growth will pick up nicely over the medium term, and the market will more than make up for any weakness shown at the beginning of the taper. Please see the UK as an example of how things go when QE is over.
3.) Over the long term, if bank activity gets too aggressive, we could finally see that inflation everyone is talking about. I say “could”. That possibility is a long ways away yet in my opinion. It’s far from clear that interest rates will ever get so high as to properly motivate the banks to go crazy. The FED will have plenty of time to act.
Spent the weekend in Marin County, then came back to CenCal. Saw the bifurcated economy up close and personal.
What did you see?
just on the state income tax side?
“But, and this is my friend’s concern, NC law makers may step in and get rid of the mortgage interest deduction”