We take on the economic outlook for 2015. Oil is low. U.S. growth is high. The rest of the world, a little worrying.
Americans got so used to a bad economy for so long that the surge of good news late last year was a little hard to take on board. Five percent US growth in the third quarter. That’s booming! Unemployment down again. Oil prices positively swooning and US drivers smiling at the gas pump. But wait. Are these happy days? The Dow fell 300-plus points on low oil prices yesterday. Wages have barely budged for most people. The US is looking good globally, but if Europe tanks, do we tank too? This hour On Point: the economy in 2015, from housing to jobs to fundamentals to your paycheck.
-- Tom Ashbrook
Daniel Altman, economist and author. Senior editor for economics at Foreign Policy. Author of "Outrageous Fortunes: The Twelve Surprising Trends That Will Reshape The Global Economy." (@altmandaniel)
From Tom’s Reading List
The Wall Street Journal: Euro Tumbles to Nine-Year Low — "Many investors think Mr. Draghi will this month announce large-scale purchases of government bonds, a policy known as quantitative easing, which could add about €1 trillion ($1.2 trillion) to the central bank’s approximately €2 trillion balance sheet. The buying would push down bond yields, which move inversely to prices, reducing the appeal of the euro to investors. The next monetary-policy meeting of the central bank’s governing council is on Jan. 22."
The Guardian: US jobs report beats forecasts as 321,000 positions added in November -- "Job creation has been growing all year – but, much to the consternation of many economists, the jobs being created are heavily part-time and low-paid. These low-quality jobs and low pay ensure many Americans are not working. In November, for instance, 73,000 of the newly created jobs were clustered in low-wage categories. That has created a near-record low number of Americans participating in the workforce, at 62.8% – levels last seen during the 1970s. That number has not budged since April, showing a stubborn stagnation."
Foreign Policy: A Bad Business Model Is Taking Over the World -- "Unfortunately, changes in the global economy are only making the razor-and-blades model more attractive. Lower oil prices will lead to cheaper plastics, giving companies a chance to drop prices or claim higher margins on disposable items. Tax cuts and austerity measures around the world will reduce funding for public goods. And as consumers’ attention spans shorten, their tendency to seek instant gratification from products will low up-front prices may increase."
This program aired on January 6, 2015.