A Prediction on the 2014 Economy

Appearing on CNBC’s “On the Money,” Senior Fellow David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy, told the host that “There are finally some signs that next year might be the year that things really get better” for the U.S. economy.

Nothing like a 4 or 5 percent growth that we’ve seen after past deep recessions, but it would be nice to be at 2.5 and 3 percent and that might help bring the unemployment rate, which is still high at 7 percent, down enough so that employers will have to raise wages or begin to raise wages and that will create the spending power. It does depend on no bad surprises …

When asked what is “fundamentally different” about 2014, Wessel offered two ideas:

Consumers appear to have paid down enough of the debt so they’re beginning to borrow again. Congress has stopped ratcheting down on spending—this recent budget deal means that they’ve let the belt out a little bit on government spending. And importantly, once they get past this debt ceiling thing …. it will be a year and a half without big confrontations over the budget. I think both of those will be very helpful.

Watch the full interview here.