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After the positive jobs report in the first week of July, 2014, economists have been revamping their forecasts in order to reflect an even more optimistic outlook on the recovery of the US economy. The predictions of the economists range from lower unemployment rate to continuous job growths every month. Despite the positive forecasts, if we learned anything from our past experiences, we shouldn’t raise our hopes in accordance with the predictions of the economists. At the Economic Forecast Breakfast, held at The Lakeland Center, Villamil has reportedly mentioned that the American recovery is now moving in the right direction. He also said that America is presently having a steadily improving economic climate and hence in response to that a favourable business climate can soon be expected.

Villamil, a business economist and a university educator has counted the US and global economies among economic drivers that evince strong recovery in 2014. Earlier in 2014, GDP revisions showed that the American economy fared in a much worse manner than what was anticipated and this report caught some economists off guard. However, the people who were not shocked by this report were none other than the average Americans who have witnessed soaring expenses in spite of their wages and income remaining the same. Similarly, they also remained sceptical about the job listings and the employment situation that was predicted by the economical analysts.

2014 and beyond – The US economic outlook

As mentioned earlier, the outlook for US growth remained positive. Exports to emerging markets, strength in the housing market and enhanced domestic oil production may be hampered by uncertainty. Businesses and households are both hesitating to purchase anything that needs long-term commitment. This is one of the reasons why majority of the companies are unyielding to buying capital equipment and hiring people.

After the revision of GDP growth rate in the last meeting of the Federal Reserve, average GDP growth in 2014 is predicted at 2.1-2.3%, 3.0-3.2% in 2015, 2.5-3.0% in 2016 and 2.1-2.3% after 2016. By the end of 2014, the unemployment rate will plummet to between 6.0-6.1% and that’s certainly better than the 6.7% targeted by the Fed. After that the rate will continue to fall to between 5.4-5.8% in 2015 and 5.1-5.5% in 2016. This economic forecast is gradually getting more and more optimistic. Sadly enough, most of the jobs that were added are in low-paying food and retail service industries. This implies that structural unemployment has increased. There are huge numbers of people who have been out of work for such a long period of time that they can’t return to high-paying jobs that they had.

Economists analysed that inflation will be between 1.5-1.7%. The core inflation rate, which is the rate without gas or food prices, will range between 1.5-1.6%, way below the 2% target of the Fed. However, this is projected to rise to between 1.6-2.0% in 2015 and 1.8-2.0% in 2016.

It’s pretty easy to view all the predictions as a numbers game and therefore it’s important to remember that there are some real people behind this who are crunching the numbers and helping us with worthy trends and anticipations. As per a recent poll by CNN, 65% people don’t believe in the aforementioned numbers and they think that actual economic recovery won’t happen until 2017. This pessimism is certainly going to adversely affect the jobs market.

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