Three Questions for 2015
By Isaac Cohen*
The US economy closed 2014 vigorously, with the creation of almost 3 million jobs throughout the year, the best since 1999, together with low inflation, a strong dollar and plunging oil prices. The following three questions for 2015 emanate from the concern if such strength can last in the New Year.
The fundamental unknown of 2015 is when the central bank will begin the expected liftoff of interest rates, changing the monetary policy stance which has prevailed for the last seven years. At the end of last year’s meeting, the Federal Reserve said it could be “patient,” despite the 5.6 percent unemployment rate, as long as inflation remains subdued. Still, most analysts expect the interest rate liftoff will start by mid-year.
The second major question is when oil prices will hit bottom. US consumers have enjoyed the reduction in gasoline prices, which started in last summer and is also contributing to lower inflation and less costly imports.. However, producing regions and the banks, which financed the domestic oil and gas production boom, are starting to retrench because of the collapse in prices.
Finally, the question remains if the US economy can continue expanding vigorously, despite the global weakness of both the advanced and the emerging market economies.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.