This is what the economy will look like in 2014
Recapping the day's news and newsmakers through the lens of CNBC.
The so-so 2014 economic crystal ball
As business leaders start laying plans for 2014, how much help can they expect from the economy? Well, the good news is things are expected to get better. But a survey of economists says GDP growth will only inch up, to about 3 percent versus the recent 2.5 percent pace. Job gains may average around 200,000 a month, just a tad over this year's 190,000, leaving wages flat and jobs scarce for young people. Interest rates will rise, but not dramatically. Given all this, consumer spending will not grow significantly, either.
"This is very, very bad, because for people who are starting their new jobs, if they start out at a reduced level of employment with reduced wages, they will never catch up during the duration of their working life."—former Labor Secretary Elaine Chao
Job seekers hold out for something better
For obvious reasons, workers find grim job prospects discouraging. A survey by online placement firm Beyond.com shows that, in addition to people who simply give up on job hunting, there are many who keep looking but pass up opportunities in hopes of finding something they'll like more. Perhaps employers unsatisfied with the applicants could emphasize how a so-so job could lead to something better. Beyond.com says more than half of job seekers spend less than 10 hours a week job hunting, and many of them don't try hard enough to show how their skills match a prospective employer's needs. Scattering a generic resume to the winds is just not good enough.
"A lot of job seekers are having to go online, and they feel lost in the process. Their biggest complaint is that they don't know where they stand, and that HR departments are not looking at them carefully and more or less weeding them out before they get a chance to prove themselves."—Beyond.com Vice President Joe Weinlick
America: Land of (pretty good) opportunity
This sluggish growth is not helping America's image as the land of opportunity, especially among Americans. In fact, a new study by The Boston Consulting Group found that Americans are less upbeat than foreigners about opportunity in the U.S. Non-U.S. residents ranked the U.S. as the third-best place to live, behind Australia and Canada. Foreigners cited economic opportunity as the primary reason to live in the U.S., while U.S. residents thought that less significant than political freedom and tolerance.
"It's revealing that nonresidents feel more positive about the economic opportunities in the U.S. than residents. What the research may suggest is that the recession has tempered Americans' enthusiasm for economic opportunity."—BCG partner Christine Barton
The dreaded stagflation specter
So far, the balance sheet expansion to $3.6 trillion has helped generate—if you give the Fed the extreme benefit of the doubt—slow but steady employment increases and subpar economic growth.
Inflation has been confined to the corners that central bankers generally dismiss—rising commodity prices that manifest themselves in gas and groceries. But with interest rates accelerating, the economy growing and the Fed charting a course to exit its historically easy monetary policy, the inflation picture could begin changing.
Economist David Rosenberg, who also serves as strategist at Gluskin Sheff, believes the day is near when inflation starts coming alive, and with little benefit to those not in the risky end of the financial markets. In fact, he thinks a mild stagflation—high unemployment and inflation—is in the cards.
"It is not possible to keep real short-term interest rates negative for this long in the face of even modestly positive real economic growth without generating financial imbalances and inflationary excesses down the road."—Rosenberg, in a Financial Times commentary
The demise of Romney's '47 percent'
The 47 percent that Mitt Romney famously cited has become, well, the 43 percent. That's the share of households that don't pay federal income tax. Two reasons for the lower number: some temporary tax cuts created during the Great Recession have expired, and the slowly improving economy has boosted some household's incomes to taxable levels. The Tax Policy Center, which calculated the new number, says the figure will drop to about 33 percent over the next 10 years. Most of the nonpaying households have members who are employed but not making enough to trigger income tax. Most of the rest are elderly people with low incomes. And people who don't pay income tax are often nonetheless paying payroll tax, sales tax and state taxes.
"These people are taxpayers. That's an important point to make, I think."—Roberton Williams, a senior fellow with the Tax Policy Center
—By Jeff Brown, Special to CNBC.com.