Economist Predicts Growth in World Economy

   LEXINGTON, Mass. - (BUSINESS WIRE) - 12/13/2013 - After wallowing in an economic “soft patch” for the past two years, the global economy is likely to emerge in 2014 with modest growth of 3.3 percent compared with 2.5 percent this year, according to a forecast from Nariman Behravesh, chief economist of IHS.
   “The easing of the twin headwinds of private sector de-leveraging and public sector austerity will bolster the improved outlook, especially for the developed economies,” Behravesh said. “Many emerging economies will also likely enjoy stronger growth in 2014, pulled along by export-led growth to the United States, Europe and China. That said, the global growth rebound is likely to be quite modest.”
   The global growth outlook for 2014 is the summary forecast in Behravesh’s annual Top10 Economic Predictions, which were released on December 12. The U.S. economy is forecast to slowly speed up. The drag from fiscal policy will be less, allowing underlying strengths in the economy -- such as housing, the ripple effects of the boom in unconventional oil and gas production, steady growth of consumer spending, and an uptick in capital spending -- to become more visible, resulting in growth of 2.6 percent in 2014, compared with 1.7 percent in 2013.
   Despite signs of weakness, the European recovery will continue, but at a very sluggish pace. Forecast growth of 0.8 percent will be supported by very accommodative monetary policy, stabilizing labor markets, less emphasis on austerity, improved spending power, better competitiveness in peripheral countries and greater confidence in Eurozone politicians to manage their sovereign debt crisis. Germany and the United Kingdom will grow faster than they did in 2013; Greece, Italy and Spain will struggle to attain positive growth. IHS expects China’s growth to inch up from 7.8 percent in 2013 to 8.0 percent in 2014.
   The government is expected to apply additional moderate stimulus if growth dips below 7.5 percent and stronger stimulus if it goes below 7.0 percent as China looks ahead to problems of an aging population and the consequences of rapid credit growth, including a new housing bubble and rising debt levels.
   The other Top10 predictions include:

• Other emerging markets will also perform a little better, with real GDP growth strengthening to 5.4 percent in 2014 from 4.7 percent in 2013. U.S. and Chinese growth will be stronger, and the Eurozone will no longer be a drag, resulting in emerging market exports becoming a source of growth. 
• Unemployment rates in advanced economies will remain high, dropping only to 7.9 percent in 2014 from 8.1 percent in 2013. Improved productivity will erode demand for labor, and aggressive cost-cutting will continue unabated. In the U.S., the unemployment rate is forecast to decline from 7.5 percent in 2013 to 6.6 percent in 2014. 
• Commodity prices will go nowhere in 2014, as they did in 2013, as gradually strengthening demand is matched by higher production and ample inventories. Inflation will remain a low-level threat. 
• The Federal Reserve will begin scaling back stimulus, while other central banks will likely wait or provide more stimulus. The Fed is likely to start trimming its bond purchases no later than January 2014. The Bank of England is expected to raise interest rates in the second half of 2014. However, because of continued weak growth, the European Central Bank may engage in another round of Long-Term Refinancing Operations. 
• Fiscal headwinds, particularly in the U.S. (thanks to the recent budget accord) and Europe will ease. The U.S. federal budget deficit is expected to be unchanged from 2013 to 2014 at just under $700 billion, following a sharp drop from about $1.3 trillion in 2011. Easing fiscal pressure will also be evident in Europe and many of the Eurozone’s crisis economies will be given a little more time to meet their fiscal targets. 
• The U.S. dollar will strengthen against most currencies because U.S. growth will be strengthening, growth differentials with other advanced economies will be sizable, and the Fed is likely to remove stimulus sooner than most other major central banks. 
• There will be more upside risk than downside risk for the global economy: Stronger than anticipated growth in the U.S., U.K. and Germany, combined with better emerging markets performance in China, India and Brazil will likely surprise to the upside; instability in the Middle East and North Africa, additional fiscal drag, and disappointing news from emerging markets will persist on the downside. 
• For 2013, IHS forecast that global growth would hold steady at 2.6 percent and it stabilized at around 2.5 percent. Nine out of 10 predictions for 2013 were on the mark.

Group Releases Transportation Performance Index

Report Says Underperformance is Drag on Economic Growth

   WASHINGTON -(BUSINESS WIRE) - 9/23/2010 - The U.S. Chamber of Commerce has released the first-ever nationwide and state-by-state “Transportation Performance Indexes” which show a significant decline over the last five years in how America’s transportation infrastructure is serving the needs of domestic commerce, international trade and the overall U.S. economy. The annual index is the first of its kind designed to look over time at how U.S. transportation infrastructure is serving the needs of the U.S. economy and business community.

   “The performance of the nation’s transportation system is not keeping pace with the rate of growth of the demands on that system,” said Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce. 
   “As our economy recovers, the nation’s transportation infrastructure must be prepared to meet the projected growth in freight and population. In fact, a 10-point improvement in the new national transportation index could generate 3 percent more growth in the nation's Gross Domestic Product. Our index however shows that from now through 2015 there will be a rapid decline in the performance of the system if we continue business as usual. Right now we’re on an unsustainable path.”
   The annual Transportation Performance Index combines indicators of supply (availability), quality of service (reliability, predictability, safety) and utilization (potential for future growth) across all modes of passenger and freight transportation – highway, public transportation, freight railroad, aviation, marine and intermodal – to show how well the U.S. transportation system is serving the needs of businesses and the overall U.S. economy.
    The national index is 51.24 in 2008, which is a slight improvement from 50.74 in 2007. However, the moving average, which smoothes the annual variations, reveals a clear downward trend from 2003 to 2008, demonstrating that the performance of the U.S. transportation system is not keeping pace with the demands on that system. Today’s release covers the time period from 1990 to 2008, the last year for which national-level date is available. Over this period the index – or the performance of our transportation system – increased only about 6 percent while U.S. population during that time period grew 22 percent, passenger travel grew 39 percent, and freight traffic grew 27 percent.
    “The bottom line is this: our nation’s deteriorating infrastructure is placing a major drag on our economic growth,” said Donohue. “We must focus on improving the way transportation delivers for business, removing barriers to maintaining, modernizing and expanding our nation’s transportation infrastructure, and driving increased public and private investment.”
   The 2007 state results range from 85.12 for North Dakota to 35.08 for the District of Columbia. While the District of Columbia is somewhat of an anomaly, New Jersey has the next lowest index with a value of 46.71.    
   Higher population growth rates and higher population densities are generally associated with lower index value based on an analysis of state results versus population data. While this warrants more rigorous analysis, a closer examination of the states with an index value of less than 60 reveals that these states experience significant pressure in terms of population growth, high levels of development, and limited access to or aging infrastructure.
    A highly ranked state like North Dakota cannot afford to ignore the importance of pressures on the transportation system in states like New Jersey. For example, to double U.S. exports by 2015, the nation’s transportation system as a whole must work efficiently to get U.S. products to the world’s markets.
   “The gap between the national index and the best performing states is twenty points wide,” added Donohue. “We’re leaving $1 trillion on the table in GDP by not getting the most bang for the buck out of our transportation system. If we don’t head off that decline, we’re taking money out of every American’s pocket.”
    In 2011, the Chamber will release indexes for water, energy, broadband, and a composite Infrastructure Performance Index. For additional information on the Transportation Performance Index, including state-by-state results, graphs, the accompanying technical report and the Chamber’s policy recommendations for getting U.S. transportation performance back on track, visit www.letsrebuildamerica.com. The indexes are available here: http://www.uschamber.com/lra/transportation-index.