2014 Round Up: US Economy

Morningstar economist Bob Johnson gives his round-up of the last 12 months across the pond and outlines what investors should expect from the US economy in 2015

Robert Johnson, CFA 29 December, 2014 | 5:00PM
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While our overall economic forecast for 2014 and 2015 GDP are little changed from our third-quarter update, some of the pieces have changed quite dramatically. Overall GDP growth is likely to remain in the 2.0%-2.5% range in 2015, as it has for the past three years. We stuck with our GDP forecast for the entire year and avoided the up-and-down adjustments that a lot of other forecasters have made.

Most forecasters were a lot more bullish on 2014 and then overreacted to weather-related issues early in the year. Though some year-end data, especially from the United States, looks stronger going into 2015, a weak world economy is likely to act as a brake on overall U.S. results.

Due to a year-end dive in gasoline prices, our December-to-December inflation forecast will come in wide of the mark for 2014, with inflation likely to be 1% or less compared with our previous forecast of 1.8%-2.0%. We are, however, sticking to that forecast for 2015, as gasoline prices are likely to be considerably higher a year from now.

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Robert Johnson, CFA  is director of economic analysis with Morningstar.