On the back of the economic rebound in the third quarter of 2013, consumer confidence in the US is at a six-month high. According to Economic Sentiment Index (ESI) prepared by Hamilton Place Strategies (HPS), a Washington DC-based consulting firm and Civic Science, a Pittsburgh-based data company, consumer confidence has been steadily rising since the end of the US government shutdown in October and, by the end of 2013, was at its highest level since July.
“The ESI’s rise over the past two months is consistent with the trends of other economic indicators that are driving stronger growth forecasts in 2014,” a statement published by HPS and Civic Science reads. Personal finances and the job market are among the factors that improved most dramatically towards the end of the year. “While labour market weakness continues to be a drag on the index, confidence in the ability to find a new job has improved nearly 11 points since October and ends at its 2013 high,” claim experts from HPS and Civic Science.
Despite an increase in overall consumer optimism towards the end of 2013, not all indicators are up. Consumer assessments regarding the timing for house purchases and other major purchases contracted in mid-December and so did the forecast regarding the state of the US economy within the next six months, according to ESI.
Institutional forecasts for the US economy are largely positive. “We see a lot more certainty for 2014,” Christine Lagarde, the International Monetary Fund's managing director said during a December interview with NBC. "Seeing a budget deal, seeing tapering by the Federal Reserve, which is a sign of confidence in the real economy, should lead them to invest, to hire and to be more confident into the future of the US economy." Without specifying a figure, Ms Lagarde stated in the NBC interview that the US GDP growth forecast for 2014, set in October at 2.5%, will be raised.
Furthermore, the Manufacturers Alliance for Productivity and Innovation (MAPI), a Virginia-based think tank, predicts that manufacturing industrial production will continue to expand in 2014 and, at a rate of 3.6%, will grow faster that the overall economy. Among factors quoted by Dan Meckstroth, MAPI's vice-president and chief economist, are rising house prices, increased spending for consumer durables due to pent-up demand, and more balanced job growth between the manufacturing, mining, construction and services sectors.