"We see a lot more certainty for 2014. With the unemployment rate falling, the Fed's action last week and the government budget agreement, all of that gives us a much stronger outlook for 2014, which brings us to raising our forecast."
- Christine Lagarde, IMF Managing Director
It has been a nervous, but positive year for the United States economy. Despite the government lockdown and series of budget cuts, the economy expanded at the fastest pace since 2001 in Q4, while the Fed has finally began tapering its stimulus programme. Moreover, 2014 is supposed to be even more optimistic, as the IMF Director Christine Lagarde said a budget deal in DC as well as stimulus tapering eased doubts about the future of the world's largest economy. The International Monetary Fund currently predicts the U.S. economy to post a 2.6% growth in 2014, after expanding 1.6% this year. Moreover, the unemployment rate, currently at 7%, will keep falling down amid rising confidence that will boost hiring. Nonetheless, despite a welcoming budget deal, legislation does nothing to avoid a possible debt default in case the Congress does not increase a cap on the nation's borrowing. Hence, one of the main concerns for the economy are deeply divided party lines.
While the greenback has lost 0.29% against the basket of major currencies during the last 130 days, U.S. stocks refreshed new highs this year. The S&P 500 index soared about 27% this year, and is on track for its biggest gain since 1997. The Dow index rocketed almost 24%, while Nasdaq ticked up 36% for the year. Analysts, however, believe markets may loose around 10% next year.
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