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ECONOMICS: OECD's U.S. Economic Forecast Summary For November 2013

OECD says economic growth has been modest in 2013 but will gather momentum in 2014 and 2015. The ongoing fiscal contraction and low consumer and business confidence have been creating strong headwinds, but are assumed to diminish during 2014. Gradual labour market recovery, debt deleveraging and gains in asset prices will underpin consumption and residential investment growth.

According to OECD, easing credit conditions and ample corporate cash flow will support increasing business investment. The budget situation is becoming healthier, but much of the progress is due to across-the-board spending cuts and the expiration of past tax cuts. Less attention has been paid to the necessary task of developing a medium-term strategy to ensure fiscal sustainability. Monetary policy needs to remain accommodative for some time. Nevertheless, if economic growth strengthens as expected, monetary policy should begin the gradual process of normalisation, first by tapering large-scale bond purchases and then, in the course of 2015, by starting to raise policy interest rates towards a more neutral stance.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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