One of the top economic forecasters says he doesn’t agree with those who see a slowdown coming for the U.S. economy this year.
“I don’t see where it’s coming from,” Jim O’Sullivan, chief U.S. economist for High Frequency Economics, tells MarketWatch in discussing a possible slowdown. O’Sullivan, who has been Marketwatch’s forecaster of the year for three straight years, says key indicators like jobless claims and the Institute for Supply Management’s nonmanufacturing index remain healthy, and he expects job growth will rebound to its trend of around 190,000 jobs added per month. Despite a disappointing January manufacturing report and jobs number, he says, “There’s no case for a sudden slamming on the brakes.”
O’Sullivan says the clearest change the economy will see in 2014 “is fading fiscal drag.” He says tax hikes and spending cuts cut about 1.5 percentage points from growth last year. That figure should fall to about 0.5 percentage points this year. He does say that inventory building and home building might provide less growth in 2014, but he thinks the consumer sector should pick up the slack.